a uniform c across a region with similar economic and political attributes.
When the idea of a single c was first suggested, doubts raised as to the credibility of the governance as each member states had different political heads. With the single c, however all these political heads would be combined as one governing body to govern all member states. However in a region with similar economic and political attributes, the idea seemed successful with the formation of EU which consisted of European Council to manage course of actions and to suggest new laws; the European parliament to discuss on and endorse laws suggested by the council & finally the European Commission with personnel to accomplish the laws. The EU helped a great deal in providing effective governance in the Euro-zone which helped European economy overtake US economy in 2009 with a trade of $14.5 trillion against US trade of $14.3 trillion, thereby accounting to 40% of the world's economic power.
Further, researching the different factors and aspects of what makes a c succeed or fail in meeting its set objectives shall provide insight into understanding the dynamics of the relationship between members of the EU.
The vital factors that help judge the efficacy of a c are the size of the economy, political stability, and role in international trade, transparency and openness in domestic markets, easy convertibility to cash and impact of macroeconomics in preserving euro.
Relationship between EU members had been strengthened after the launch of euro. That's because almost 17 of the 27 member states have approved euro. It has also paved the way for a single monetary council to govern the functioning of euro throughout the euro-zone. Moreover cross border trade had increased which was mainly due to creation of single c which cuts transaction costs. Transparency had also been maintained with the euro in domestic markets without price fluctuations. Tourism had also increased with the launching of euro, as tourists didn't have to keep changing their currencies when travelling around the euro-zone. This way Euro ensured easy convertibility of cash. Finally member countries which were financially rich in EU were used to backup poorer economies in EU, thereby ensuring financial stability whenever any of the macroeconomic components triggered a threat to EU. It was this backup which helped euro from failing to a greater extent when the 2008 crisis broke out.
The report also provides ground for analyzing the advantages of poorer EU member states adopting the Euro c. This will check the economic drive that can occur from having a monetary union between countries with varying economic statures.
The advantages of poorer economies joining the euro can be said to be both an advantage as well as a disadvantage. It's an advantage as even if they fail to repay bills owing to crisis, with the help of EMU they would get help from the richer economies in EU to repay the bills. Disadvantage can be attributed to the fact that salaries may be lesser in less productive areas when compared to salaries of employees in higher production areas. This advantage is due to the fact that all of these employees are now paid in Euros. So indirectly it can pose a threat as the standard of living may vary from place to place, but the salaries remain the same, thereby generating problems in getting even basic daily household thin
