The paper "Anticipated Benefits of Adopting Euro" is a perfect example of a finance and accounting case study. The European Monetary Union (EMU) is considered the only section of a mega vision representing an integrated Europe (Cooper and Tomic, 2007). Its formation has gone for a very long time and has vast historical significance to the whole of Europe. During the signing of the Paris and Rome conventions, the leaders all over Europe came up with European Union legal basis which has foreseen a very substantial advancement of Europe as a continent (Cooper and Tomic, 2007).
They have been able to form a common market which has allowed the free movement of both people and goods as well as capital. This has been considered as one of their greatest achievement as a continent. At the beginning of the EMU, it had a total of 11 Member states but for now, it has a total of 17 states (Cooper and Tomic, 2007). The EMU entails changes within the system that exists between currencies of different nations and then integrating it into a single European currency which is known as the euro (Panizza et al. , 2009).
This common currency led to the separation of National Central Banks which is comprised of separated National Monetary policies and into a single National Central Bank as well as a single European Monetary policy. Therefore, the adoption of the euro has been one of the most courageous partaking every performed (Veen, 2002). It was primarily performed so that independent states may earn profits from the use of the single currency. This essay will describe the key predicted benefits of implementing euro for both organization and Eurozone member states.
In addition, it will detail out the origins of the Eurozone sovereign debt crisis. The benefits derived from unionization of the euro can be observed in two vantage points; either from the individual member state or from the Eurozone as a whole (Beetsma and Giuliodori, 2010). The convergence operations for Eurozone entrance is directed at making sure that any participation within the Eurozone is beneficial for both. The emergence of the euro as a single currency unit is expected to bring about the stability of the exchange rates within the zone (Beetsma and Giuliodori, 2010).
This stabilization of the exchange rates has supported trade as well as enabled economies of scales. It has also offered a stable condition for a more efficient allocation of resources. For the ordinary citizens, the advantage they derive from the unionization of their currency is that the issue of conversion is completely barred since the member states within the Eurozone share the same currency (Tavlas, 2004). Additionally, it is predicted to result in monetary stabilization within the Eurozone (Kopf, 2011).
This will be achieved by minimizing the rate of inflation as well as a merging of long-term interest’ s rates to match the low levels dominating in the member states that possess the highest monetary policies credibility prior to the introduction of the euro (Pisani-Ferry, 2013). Furthermore, in spite of the various economic shocks that occurred over the years, which was primarily caused by the cases of oil prices as well as the development of the financial markets and inflation, the euro stayed stable and anchored to price stability as described by the European Central Bank (Acharya and Steffen, 2015).
Price stability paired with low inflation rates as well as low long-term interest rates has offered significance support for sustainable economic growth and job creation.
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