The European Monetary Union (EMU) - The Euro as a Single Currency Essay

The European M angiotensin converting enzymetary Union (EMU) - The Euro as a Single CurrencyLiberalizing cunning is nothing new to the world, but we have never witnessed such a vast economic desegregation between sovereign countries like the integration carried out in the European Union. Customs duties between European countries started to arrange down steadily in the early 1950s and were abolished in 1968 with the gate of a customs union and the implementation of the common external tariff. The appointed proclamation of the single market on 1 January 1993 marked the culture of non-tariff barriers to trade between Member States. European Monetary Union allow for make it possible to complete European economic integration. The groundwork of a single money entrust mean price transparency, that is prices of goods can be directly compared on the markets of the participating Member States, which will merge into one market. Obstacles to trade such as the transaction costs, which a dd up to 0.4% of the EU GDP per year, and the exchange risk, will be eliminated. The competitive positions of companies can no longer be established by exchange-rate movements but will muse productivity, inflation and cost differentials. This should permit a better allocation of dandy and of available resources. The instalment countries will also be able to cede administrative costs used for hedging operations. Over and above its domineering effects on price stability and public finances, the single currency will make it possible to complete the single market and extend the benefits, which have already flowed from it. Monetary Union will create an bailiwick within which national pecuniary markets will become an integrated, wider and more conciliatory market. Financial institutions and financial centers will face new competitive conditions. The coat of a specific national market will lose its significance. controversy will increase and could lead to greater harmonization a cross the euro area. The accounting entry of the euro will have a great impact on the financial sector. This is because of three main reasons The European System of Central Banks will be operating the single monetary policy in euro. So, it will be necessary for financial institutions to be able to operate in euro. Governments will issue all new debt in euro. Therefore, financial institutions, payment systems and alter ... ...ch the problems associated with the changeover to the euro will be resolved. Second, the national currencies of the EMU members are no longer independent. They are fixed to the euro. A speculation between currencies of the member states is pointless because this is equal to speculation with a currency of the same type.The introduction of the euro in 1999 was an event, anticipated for a long time. Following, the euro has faced some problems due to the transaction period, but on that point is a strong belief that these problems will be easily overcome as the young currency accumulates power. immediately that, the euro has become the official currency of the European Union (with some exceptions) there will be no more national currencies of the member states. In this way, we become witnesses of the highest level of integration among independent nations in the world history, when the European Union is expected to become the leader in the world economy.Bibliography1.Kreinin, external Economics, 1991, Harcourt Brace Jovanovich2.Cecchini, The European Challenge, 1992, Wildwood House3.European Central Banks web site http//www.ecb.int4.EMU official web site http//www.emu.int