The concept of a single European currency is not a new one. It was first proposed in the 1970s but was abandoned until 1991, when it was given the go ahead by the European Union. This decision was taken with the view of completing the single market for goods, services, people and capital in Europe, and of enhancing the welfare of citizens within the EU. Since then there has been an on going debate over the soundness of this decision and the effects it is likely to have on both the European and World economies.

One of the most obvious advantages of the euro is the resulting ease of transactions across the countries of the EU. For businesses this means that they no longer have to pay the hedging costs, which they do today in order to insure themselves against the threat of exchange rate fluctuations. Businesses

The euro is also likely to bring about lower interest rates. In the past, additional interest was charged to cover the risk of exchange rate fluctuations. With the introduction of the euro this risk is gone, therefore leading to reductions in interest rates. A lower interest rate would result in businesses paying less interest on any loans they have or wish to take. This will increase firms' profits and encourage new investment and expansion plans. Consumers will also benefit by having to pay less interest on their loans and mortgages, which will in turn increase their disposable income. This will lead to increased consumer spending especially on luxury goods, increasing consumer standards of living and benefiting businesses by increasing the demand for their products.

The euro is predicted to be a more stable currency than any of the currencies of its member states, as it would have the improved credibility of being used in a large currency zone, making it less vulnerable to speculations than the individual currencies are now. This would give businesses a greater potential for growth as it allows them to project future markets with more certainty and would make investments in the euro zone safer and more calculable.

Among the monetary and fiscal authorities withdrawn from national governments once they adopt the euro are the rights to set interest rates and their levels of government spending. All the EU countries have different economic cycles or are at different stages in their cycles. The UK is growing reasonably well, Germany is having problems, a reverse of the position in the 1990s. It because of this that interest rates are set in each country at the appropriate level for itself. One central bank cannot set inflation at the appropriate level for each member state.

Another of the disadvantages brought about by the euro is the

Some common words found in the essay are:
European World, Growth Pact, Sweden Denmark, L17 L35, European Union, Portugal Spain, , Roman Empire, Retailing Consortium, euro zone, exchange rate, exchange rate fluctuations, national currencies, monetary fiscal, accounting systems, change money, joining euro, eu countries, labour mobility, country recession,
Approximate Word count = 1248
Approximate Pages = 5 (250 words per page double spaced)