The Euro: Why is it So Weak?
A single currency has always been a dream for many European countries, as it would symbolise stability and unity, both economic and political. The Euro was launched in 1999 amid much Euro-phoria. Many people believed that the Euro would replace the dollar as the main international currency: a medium of exchange, store of value, and unit of account. Not only that, but they also believed that it would also be used as the main shipping currency, especially within Europe.Saddam Hussein even hoped that the Euro would spell an end of the US dollar's reign, and the US's supremacy, and played his part in promoting the Euro by pricing his oil exports in Euros.It is many peoples opinion that a single market would be hard to maintain without a single currency. The economic benefits of the Euro and ECB are as follows. Firstly, efficiency gains arise as the single currency removes the need to hedge against foreign exchange risk when dealing within the Euro zone. The second benefit is greater macroeconomic stability as the single monetary policy from an independent central bank provides European countries with an environment of price stability. A single currency should result in lower interest rates,
Actually, growth was closer to 5% in the US, and 3. The EU should stop worrying about the weakness of the Euro, and focus policy on facilitating the restructuring of European business so that it can become more competitive. Gerhard Schroder, the German Chancellor, called for a "form of basic law" for the European Union, and on April 12th called for a more powerful European executive that could levy taxes directly. Initial attempts in late 1999 and the first half of 2000 to do so by raising European interest rates failed. It currently is seen as a safer alternative to the dollar, due to unrest in the middle east and numerous accounting scandals in the US. The depreciating Euro causes exports to increase, hence GDP will also increase, and European manufacturers would be forced to become more competitive. 5bn in special rural development funds in the first three years of its European Union membership. It represents an economic block of 289 million people, 20 million more than the USA. The combined exports of the 12 countries is 25% greater than the USA and can be regarded as the largest trading block. The dollar depreciated 35% over the three years after its peak in early 1985. The value against the dollar, as well as other currencies including the Japanese Yen, continued to plummet, until it reached an all-time low of around $0. The Euro will then be a strong and stable alternative to the Dollar, and may even replace the dollar as the main international currency.
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