Clem & ellen economics x

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  • 1. Introduction  Single Currency  Video  Three stages of EMU  Six Reasons for Implementation  Disadvantage 
  • 2.  We are going to discuss in detail six reasons for the implementation of Single Currency. We will also discuss one disadvantage of this implementation.
  • 3.   The single currency was created in 1999 when the exchange rates of the currencies of the participating countries were locked into the euro The euro banknotes and coins were introduced in 2002 in 12 countries
  • 4.  http://www.youtube.com/watch?v=HoL NdBq9f5M
  • 5. Abolition of all restrictions on the movement of all capital  Increased co-operation between central banks  Free use of the ECU (European Currency Unit, forerunner of the euro)  Improvement of economic convergence 
  • 6. Establishment of the European Monetary Institute (EMI)  Ban on the granting of central bank credit  Increased co-ordination of monetary policies  Process leading to the independence of the national central banks, to be completed at the latest by the date of establishment of the European System of Central Banks 
  • 7. Irrevocable fixing of conversion rates, Introduction of the euro  Conduct of the single monetary policy by the European System of Central Banks  Entry into effect of the intra-EU exchange rate mechanism  In January 2002 was the introduction of the euro banknotes and coins 
  • 8.    Being able to easily tell if a price in one country is better than the price in another is also a big benefit both for consumers and businesses With price equalization across borders, businesses have to be more competitive Pricing still varies, but consumers can more easily spot a good deal or a bad one
  • 9. Increased trade across borders  The price transparency, elimination of exchange-rate fluctuations, and the elimination of exchange-transaction costs, all contribute to an increase in trade across borders of all the Euroland countries.
  • 10. Increased cross-border employment  Business can be conducted across borders more easily  People are more easily employable across borders  With single currency it is less frowned upon for people to cross into the next country to work, because their salary is paid in the same currency they use in their own country
  • 11. Joining a fixed exchange rate may cause inflationary expectations to be lower  Often countries join a semi-fixed exchange rate, where the currency can fluctuate within a small target level, however the ECB has control over it  The euro has eliminated the damaging effects of intra-European exchange-rate tensions, which accompanied external shocks in the past and were often costly in terms of growth and employment. 
  • 12. The European Central Bank (ECB), introduction of the euro also helps to lower (and control) inflation among the EU countries:  Low interest rates  Low inflation regime encouraging higher and better quality investment  Prudent government spending & low government borrowing
  • 13. Business can expand more easily into neighbouring countries. Rather than having to set up separate accounting systems and banks  Transactions in countries other than their native one, the euro makes it simple to operate from a single central accounting office and use a single bank 
  • 14. The participation requirements of the euro pushed many EU member states who wanted to participate to get their economies in shape and improve their economic growth  With the requirements of the Stability and Growth Pact, they will also have to maintain that control in the future, or face fines 
  • 15. There is no clear budgetary and Fiscal Policy in the Eurozone, despite a unified monetary policy.  As a member of the Eurozone, the Irish government has to comply with strict EU rules concerning government spending and taxation 
  • 16. USA and UK  As the USA and the UK are not in Eurozone it makes trading uncompetitive  The euro increases in value against the dollar and pound sterling this makes Irish exports to the UK and USA more expensive 
  • 17. In conclusion the six implementations of a single currency such as the euro helps increase trade across boarders, expands markets for business and helps lower the interest rates within the EU countries. Improves employment across boarders as the currency has the same value in all countries
  • 18.       http://ec.europa.eu/economy_finance/pu blications/publication7309_en.pdf http://www.youtube.com/watch?v=HoLNd Bq9f5M http://www.oxforddictionaries.com/definitio n/english/single-currency http://www.ecb.europa.eu/ecb/history/em u/html/index.en.html https://www.ecb.europa.eu/ecb/educatio nal/facts/euint/html/ei_004.en.html http://europa.eu/legislation_summaries/ec onomic_and_monetary_affairs/introducing_ euro_practical_aspects/l25007_en.htm