EMU and the UK
The idea of a single currency has already been mentioned in 1957 when the European Union was founded. During the following years several discussions about a Monetary Union took place, but without any achievements. The first steps towards the EMU were only made in 1992, when the members of the EC met in Maastricht. A timetable for the development of the EMU was created there. In the years after the treaty the preparation began. In 1999 exchange rates were irrevocably fixed and transactions started to be possible in Euros. The Eurozone consisted of 11 member states at this time, Greece became the 12th member in 2001. In December 2001 inhabitants of the Eurozone could get so-called "starter-kits" containing Euro-coins. In January 2002 also banknotes were introduced and in March 2002 the national currencies became invalid. (Barber and Naimark, 2001)Since the foundation of the European Monetary Union in 1992 there have always been arguments for and against a single currency. Despite all criticism the Euro is reality in twelve countries now. This fact has both advantages and disadvantages.The most obvious positive argument for the Euro is that
(Dettmer, 2002) Among British enterprises already accepting Euros are for example Marks & Spencer, Body Shop, Virgin or British Telecom. Not joining could even result in an increase of the structural differences. (Johnson and Turner, 1999)Furthermore a single currency without an exchange rate is a prevention from speculative attacks. , 2001) Moreover the majority of Britain's international trade is done with non-EMU countries, like the U. (Anon, 2002)As firms normally include a margin in their prices to cover unexpected exchange rate movement, this will again lead to lower prices for the consumers. Entering the EMU at the current exchange rate would lead to a stagnation of the economy until wages and prices adjust to restore competiveness. (Eudey, 1998)And a further problem is that not all EMU states are at the same stage of the trade cycle, but have to use the same interests. So, in a recession they are not able anymore to respond through an increase of money supply. Furthermore introducing a new currency lead to high start-up costs for enterprises, as they have to switch things like accounting or computer software into the Euro. The Euro will become a currency in Britain; the decision to make is thus only, if it should be the official and only currency or if it will be only accepted besides the Sterling.
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Acceptance Essays
