• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

European Monetary Union

Extracts from this document...

Introduction

European Monetary Union United Kingdom has decided not to join the Euro zone under the condition of the five economic test not favouring the British national in terms of jobs, business and future prosperity. The ex Chancellor of the Exchequer Gordon brown who is the creator of this five economic test, made a statement that not joining the Euro zone is the right decision for Britain and Europe. I will analyse this statement in this essay and back it up with evidence. I will also analyse the role of currency and exchange rates in European business and trade. Furthermore I will evaluate Britain's approach to the European Monetary System and whether the creation of the Euro was inevitable. At last, I will asses the likelihood of Britain going into the Euro. Money is a medium exchange which allows the value of the goods or services to be replaced with currency. Money is also known as a store of value, it is obliged to be reliably saved and to be regained when needed. People also refer to money as differed payment which contrasts to for example, a contract given to a footballer, the payments will be made in arrears. Unit of account is also an essential function of money. ...read more.

Middle

The base rate will be kept low compared to the current British base rate. More people will afford to buy afford to buy a property and loan. The disadvantage of adopting the Euro currency is Britain will lose their history and their national identification. The most important issue is that Britain will lose control of monetary policy to the European central bank. And there is a possibility that the fiscal policy will be next. Britain also won't be able to assist in domestic recession. Britain may also end as 2nd division Europeans, they will be reacting to Euro policy but not having a say in it. Bretton Woods the founder of International Monetary Fund (IMF) established a system of fixed exchange rates during the conference in 1944. The IMF was in charge of making member of states maintain their respective exchange rates. However, countries with high level of inflation found fixed exchange rate system reflecting to poor export performance. As their exports where relatively expensive on the world market. And those countries with low level of inflation found themselves with regular balance of payments surpluses because of their cheap exports. This how Bretton Woods attempted to link the main currencies, which became unsuccessful in 1972. The exchange rates could rise or fall within the predetermined limits, with USA's influence that turned the dollar into a 'snake in tunnel'. ...read more.

Conclusion

Goods and services can be freely moved between European members of states. Removing the trade barriers is what the European Commission complied to. The has also stabilized certainty for the European businesses. The black Wednesday happened on 16 September 1992. The government was forced to remove the pound from The ERM, due to pressure from currency speculators. Which made George Soros made 1 billion dollar. And this costs UK 3.4 billon pounds damage. The adoption of the Euro currency was evitable for the Euro zone as GDP has been growing drastically, compared to the years before the Euro was introduced. It has also been good for the trading, and the Euro currency is at the moment more valuable than the US dollars. I personally think that Britain should adopt the Euro currency to attract business to trade in Britain, which will be beneficial for the British economy. As the member of the Euro states are growing in the economy and GDP per capita wise. If the Britain joins the Euro zone and inflation arises, the ECB can control it by raising the interest rate on the mortgages to take money out of circulation. Britain is terrified to lose both their monetary and fiscal policy to the European Central Bank, these are what is holding the Britain to join the Euro zone. Which they shouldn't be worried of as the member of the Euro zone are performing well. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level European Union section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level European Union essays

  1. Marked by a teacher

    The European Union and UK Businesses

    3 star(s)

    the Single European Act introduced: In the institutional field, it ratifies the European Council, that is to say, the periodical meeting of Head of State and Government, as the organism where major political negotiations take place among the Member States and great strategic decisions are taken.

  2. Why are developing countries unhappy with the global arrangements under the Bretton Woods system?

    These countries often have difficulty in borrowing money on international markets and rely on financial assistance in the form of loans and direct contributions as well as interest free loans, grants, and technical assistance (Riesenhuber, 2001:11). The World Bank also consists of three other branches which each have different parts to play in providing financial assistance to developing nations.

  1. The Euro.

    a map of the European Union and one face which has been designed by the issuing country. The common face was agreed by the European Council following a design competition, consideration by a jury of European personalities, an opinion poll and consultation with consumer associations.

  2. Single currency and European Monetary Union. The chosen topic is number four: "What are ...

    First of all every business needs a changeover plan. The big multinational companies began preparing for the euro in 1997. All of the big companies (of course there are exceptions) will keep all of their accounts in the new single currency before the end of 2001.

  1. HND European Business

    European Round Table of Industrialists estimates that enlargement could create 300,000 jobs across current EU Member States Higher EU economic growth a) Independent research suggests that accession of the 7 largest Central European candidates could increase UK GDP by �1.75 billion b)

  2. An examination of British policy with regard to European Unity during the period 1945 ...

    With the creation of European Council it is evident that Europe had began to move in a very new, supranational direction; a direction fundamentally different to that of Britain whose calls for limited integration became increasingly ostracized. OEEC The Organization for European Economic Co-operation (OEEC)

  1. To what extent was the fall of Olivares due to the Union of Arms?The ...

    Furthermore, Philip IV's involvement in the scheme challenged the traditional passivity of the monarch with regards to other provinces. Resentment towards the Union was especially marked in Catalonia and Aragon, areas that had long-standing grievances with the Castilian government. They believed that prior to the scheme; Philip had deliberately neglected

  2. 'Economic Integration within the European Union: Have MNEs driven the Commission's decision to adopt ...

    this will not be true until several years of accounts have been produced under IFRS. This should also allow investors to make informed decisions quicker than they previously had been able to (Anon, 2004). Furthermore, firms who have operations in more than one EU Member State will have to conform

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work