Pros and Cons of the Euro :: Finances Money European Currency Essays

Pros and Cons of the Euro The United Kingdom will non join the iodin European currency with the first seethe of countries on 1 January 1999. The prime minister of the Exchequer, Gordon Brown, said in October that, although the government supported the principle of the single(a) currency, Britain would not be ready to join at least until the second wave of countries join in 2002. He added that the UK should, however, begin to prepare for m one and only(a)tary union. thither are many possible advantages and disadvantages that the government had to consider Advantages 1. A single currency should end currency dissymmetry in the participating countries (by irrevocably fixing exchange rates) and reduce it outside them. Because the Euro would have the enhanced credibleness of being used in a large currency zone, it would be more stable against speculation than individual currencies are now. An end to internal currency instability and a reduction of external currency instability would enable exporters to project future markets with greater certainty. This will unleash a greater potential for growth. 2. Consumers would not have to change money when travelling and would encounter less red tape when transferring large sums of money across borders. It was estimated that a traveller visiting all twelve member states of the (then) EC would lose 40% of the value of his money in transaction charges alone. at a time in a lifetime a family might make one large purchase or transaction across a European border such as buying a holiday blank space or a piece of furniture. A single currency would back up that transaction pass smoothly. 3. Likewise, businesses would no longer have to pay hedging be which they do today in order to insure themselves against the scourge of currency fluctuations. Businesses, involved in commercial transactions in antithetical member states, would no longer have to face administrative costs of accounting for the changes of currencies, plus the time involved. It is estimated that the currency cost of exports to small companies is 10 times the cost to the multi-nationals, who offset sales against purchases and can command the top hat rates. 4. A single currency should result in lower enliven rates as all European countries would be locking into German monetary credibility. The stability pact (the main points of which were agreed at the capital of Ireland summit of European heads of state or government in declination 1996) will force EU countries into a system of fiscal righteousness which will enhance the Euros international credibility.