The UK is a member of the European Union but has not adopted the euro as its currency. To what extent do the benefits of membership of a monetary union such as the Eurozone outweigh the costs
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The UK is a member of the European Union but has not adopted the euro as its currency. To what extent do the benefits of membership of a monetary union such as the Eurozone outweigh the costs - Essay Example
It is a type of monetary and political union. The EU monitors and controls the matters of various institutions such as, the European Central Bank and European Council. After enactment of the Maastricht…
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Extract of sample The UK is a member of the European Union but has not adopted the euro as its currency. To what extent do the benefits of membership of a monetary union such as the Eurozone outweigh the costs
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It also aimed to enhance aggregate employment opportunities in these counties. In order to enhance the level of employability, EMU aims to enhance capital investment levels of its member states. Higher sustainability of pensions and public finances are also achieved in these countries through activities of EMU. The Union tries to improve social status of its member states by increasing the extent of welfare maximizing activities in such markets (Minford, 2010).
EMU provides monetary assistance to its member states at times of emergency or crisis. If a country faces severe credit crunch and is unable to borrow money from the external market at particular rates, then it can avail the financial assistance facility of EMU. The country needs to firstly negotiate its borrowing program with the European Council and International Monetary Fund (Watt, 2014). The programme also needs to be accepted by other member states of the Union. Finally, after considering all legal regulations, the country receives the loan from European Central Bank (ECB). The amount, rates of interest, duration and procurement related activities are managed by European Financial Stability Facility (EFSF) unit (Minford, 2010).
The EMU helps to stimulate economic growth within its member countries. For ensuring this, the Union tries to enhance the level of foreign direct investment (FDI) in these countries. Higher FDI inflow in encouraged by eliminating the transaction cost and lowering risks associated with exchange rate volatilities. Lesser exchange rate volatility helps in stabilizing the prices of goods and services in the market. Moreover, employability in these countries also reflects low fluctuation due to greater stability in wage rates. Transaction costs are the expenses incurred for selling and buying securities in the share market. Such costs are composed of payments of brokers and expenses of spreads. EMU eliminates
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The UK is an example of the EU nations outside the Eurozone, but the impact of the Eurozone crisis currently witnessed does not appear to be selective. Contagion impact fast catches up with the UK and as the recessionary impacts continue to threaten smaller economies in the Eurozone, bigger economies outside the Eurozone cannot feel safe anymore.
These investments would clearly be very beneficial to the European monetary union. Trade, productivity and investment; If Britain joined the EMU, there would be enhanced productivity which would lead to an increase in trade flows between the EU nations and Britain thus stimulating competition and boosting investment.
Should Greece leave the European Union, or the Eurozone? The concept of a unified Europe goes a long way in the 9th century when the Frankish emperor Charlemagne dominated over a major area of Europe. In the 19th century, the French leader Napolean Bonaparte tried to capture many regions of Europe.
As the second largest reserve currency in the world (after the US dollar), it is one of the most important and influential currencies in usage today (Grange, 2002). Despite this, there are still ten EU member states which do not use the euro, including Poland, Sweden and the United Kingdom.
The rationale behind the formation of this association was creation of a strong single European market that would be beneficial for the wholesome economic development of all the member countries, to promote social unity among the people and most importantly, to enhance the prominence of Europe in the global economy (University of Iowa College of Law Center for International Finance and Development, 2013).
Under a permanent fixed exchange rate regime, it has been simultaneously iterated that nations reflecting the practice are provided greater price stability than if there is a fluctuating exchange rate between participating nations. This simply means that shocks in different regions within the bloc can cancel each other out and whatever disturbance is set to occur, it becomes relatively smaller since the area is increased (Salvatore 2001).
The root of the euro crisis was embedded in Greece from where it had rapidly spread in other nations like Ireland and Portugal. Both these nations were trapped in a financial condition that made them unable to receive funds from the capital market
The EU contains exclusive competence to carry out negotiations on trade and investment treaties with nations outside the union; it is a customs union with a common external tariff in goods that are imported (Anderson, & Reichert, 2012, P.239). Therefore
If the candidate does not match with the culture, the organization might be setting itself up for retention issues that are long-term. Additionally, if the employee who best matches with the organizational culture is not
There are some benefits and some cost in joining such kind of union. Below are the important costs and benefits of monetary union: (University of North Carolina, 2009).
One of the important benefits of monetary union is that it eliminate exchange rate
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