Single currency in the European Union
Single currency in the European Union. Possible costs for the monetary union. Benefits of the euro.
Since the foundation of the European Union one of the main goals were to build a common market for trade between the member countries. The aim of the founders and politicians of the EU at that time was that this market will have a strong and stable single currency for all its members. This question is important to look into as it affects all member states of the EU. Not to mention that nowadays there is a debate as to whether the single currency, the euro, should be continued in this current economic climate. As a result of this, the essay will focus on the question is the euro beneficial for member states or are the states better off with their own currencies, are there any solutions to these problems and how may they be addressed? Follow up questions such as “is there more progress when countries use separate currencies” will be looked upon.
In the paper, before giving a brief historical background of the introduction of the euro, I am going to discuss the advantages and disadvantages of the single currency that most of the European countries have. I will also examine the ways for overcoming the problems that the monetary union faces. Furthermore, I will look upon four different categories of countries, which are in the EU, for example, the large euro users such as Germany and France, followed by weaker euro using countries such as Greece. In contrast, I will look to new euro states, such as Lithuania. The last category will be countries that do not utilize the euro, like England.
There were many stages of the euro development, starting from the first attempts between the member states of the European Economic Community (created by the Treaty of Rome in 1957), when one of the main goals was the creation of a European single market (Secretariat of the Commission 1969). In that market politicians were expecting to have an absolutely free movement of money, people and different goods. However, they understood that in order to achieve the extension of European integration and general economic cooperation, member states have to agree with many standards, such as national health and safety, quality controls, different rates of indirect taxation and others (McCormick 1999). This goal of achieving the idea of having a single market became more difficult due to the economic recession in the 1970s, which encouraged states to become more “protectionist” of their economies (McCormick 1999 p. 158). However, in 1979 the European Monetary System was introduced and most countries of the European Economic Community managed to link their currencies in order to prevent big fluctuations relative to one another.
