Euro Money Essay Research Paper To most

Euro Money Essay, Research Paper

To most people in the United States hearing the word Euro brings about blank

stares. Ask this same question in England or another European country and it

means bringing Europe together under one common currency. The Euro can be

defined as the common monetary system by which the participating members of the

European Community will trade. Eleven countries Germany, France, Spain,

Portugal, Ireland, Austria, the Netherlands, Belgium, Luxembourg, Finland and

Italy will comprise the European Economic Monetary Union that will set a side

their national currency and adopt the Euro in 2002. A new National bank, based

in Frankfurt Germany, will be constructed and the interest rates that control

the economies of these nations will be in the hands of this new system. It is

indeed a great experiment, being masterminded in Frankfurt, one that will be

felt through out Europe as well as the rest of the world.1 The combined

countries, now more commonly referred to as Euroland, will fall under one

national bank. This bank, the European Central Bank, will determine the economic

fate of the entire .Union.. The merging of eleven currencies is a daunting

and somewhat lethal task. The ECB is comprised of seventeen members, each having

one vote within the governing council. What has most Europeans concerned is the

ECB.s secrecy of conducting business. There is no voting record nor will there

be published minutes of the meeting that take place. Wim Duisenberg president of

the ECB and a native Dutchman stated that he wanted the ECB to be one of the

most open banks in the world.1 When BBC reporter Steve Levinson confronted him

about this in Frankfurt Germany Wim replied I reconcile these two positions by

not defining openness as publishing everything that will be available, but by

defining openness as explaining every decision, every consideration. Also the

pros and cons and to be very open about that and to be frequent and immediate in

that openness. (Livinston, Euroland 3) Why does the ECB operation so much

secrecy. Is does not want economic policy moved by political influence. In

January of this year the Bank of Ireland became a regional branch of the ECB.

Morris O.Connell, its governor, supports the ECB.s tight lips stating I

don.t think it.s appropriate that you should be announcing how each person

may have voted. I think you.re creating other pressures then, you.re

creating pressure on individual members to reflect just the national viewpoint.

Where we are required under this treaty to take a European perspective on

things. (Livinson 5) This treaty O.Connell refers to is the Maastrich Treaty.

It is the foundation for holding together the ECB and the fait of the Euro. It

was constructed in such a way that is completely out of reach of the

politicians. This way, national views of one country will not effect the entire

economic view of the European Economic Monetary Union. One view is certain now,

the Euro will happen and the ECB will be driving the train. What is good for the

whole may not be good for the parts. This statement sums up the difficulty of

bringing the Euro into reality. Topping the concern is the setting of interest

rates through out the EMU. Interest rates normalize any economy and are the

foundations of them as well. But does one interest rate in Ireland function the

same in Germany. When one economic country is in economic crises how will the

ECB react. These are just a few of the many economic problems that will have to

be solved, as the day of the Euro becomes closer and closer. Both businesses

within the European Economic Monetary Union and outside of it as well, will feel

the impact of the Euro. Although currency has yet to be coined, today trade

using the Euro has begun. The conversion rates have been set for the eleven

nations that will partake. If business outside of the EMU thinks that they will

be unaffected by the Euro they have a surprise in store. When it fully takes

effect all trade for gods and services will be conducted with the Euro.

Companies that trade within the EMU will no longer have to worry about costly

conversion rates and delays that is inherent when using different currency for

business. As far as trade goes there will be no boarders. Countries that refuse

to trade in the Euro may have difficulties. At some point in time they will

receive payment for goods or services from an EMU country. If they are not

prepared to deal with the EURO they will loose business to competitors that are

prepared. Part of being prepared is having the financial software that is

compatible with the Euro and opening bank accounts so they can transact with

Euro currency. England has chosen not to enter the EMU. Many companies within

England will not be afforded this luxury. Trading abroad using the Euro will be

unavoidable, as many suppliers and busin

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