Question

Eleven European countries began using the euro for payments in 1999 and as a physical currency in 2002. Today 19 countries use the euro. Please discuss the benefit of using the euro as well as the reasons to not use the euro. Britain, Switzerland, Denmark and Poland do not use the euro. Why do some countries use the euro and some not? As a major currency of global standing, where else is the euro used, and why?

(300 word minimum, 500 word maximum, please include 1 outside sources)

Answer 1

Ans:

11 countries of European began using the euro for payments in 1999 and in 2002 as physical. Now 19 countries using Euro reason for that are below :

1. Lower Transaction Cost : with the common currency there is no currency exchange transaction included (Frictional cost ) .
2. Transparency in Prices : with common euro currency we compare that good- services price vary easily which is difficult to compare in different currencies.
3. Increase Trades : in same euro currency eliminated the currency exchanging costing and uncertainty, increasing transparency that increasing trade between countries. By The European Central Bank report rose in trade around 32% in 2006.
4. Internal Investment : other countries firms with common Euro Currency Area take advantages to receive fund other countries.
5. Government benefits : with Euro Currency areas reducing cost of trading bonds, equity and assets in overseas countries.
6. Resistance from financial crises : with common currency use countries no need to reservation for foreign currencies.

Dis-advantages :

1. Lack of strong government : Every county has it’s own financial policies, budgets and law but by use of common euro currency they enter in common agreement of use euro currency that effected their taxes, policies, law and budget for countries.
2. Raise or lower interest rates : with common currency it’s difficult to raise or lower the interest rate by indivisual nation.
3. No independent monetary policies : when each country had their own currency, if an economy ran into trouble, country could lower the interest rates or devalue it’s currency. But at common euro currency it’s not possible for individual Nation.

Euro is secondly most used currency after dollar. Major currency of global standard Euro is used official currency of 19 countries of the member the 27 State of European Union that is known as euro zone. Outside Europe worldwide 200 million people use currencies pegged to the euro. As December 2019 with more than 1.3euro trillion in circulation the euro has one of the highest combine values of banknotes and coins in circulation in the world ( source :European Central Bank Statistical Data Warehouse. 14 January 2020. Retrieved 23 January 2020.)