Part of The Student Room Group

  • 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

or


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)

    This way, the article 2 of the Treaty of the European Union affirms: "This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe..." The Treaty will have a structure based on three pillars, according to the artificial parlance created by those who devised and edited it.

  2. The Institution of the European Union and Theories.

    Joined the EU in 1995 but has not adopted the single currency. Belgium, the official language is German. The capital of the country is Brussels this is where the EU is based. Education is taken to be very serious and attendance is obligatory for all children and young people aged between six and eighteen.

  1. Critically discuss how global economic trend may impact upon the future policies of the ...

    Previously, the total revenue passenger kilometers(RPKs) within Europe were dominated by BA, Air France and Lufthansa, which accounting for 46% RPKs(Dearden, S.,1999b). Being forced by the competitive environment in the tourism industry with low cost carriers, such as easyJet, their revenues dropped dramatically. In result, national governments have to subsidise more through increasing tax in accordance to protectionism.

  2. An assessement of the impact of the lawyers' establishment directive.

    and makes the transient lawyer subject to discipline in the Host State (as well as in the Home State). Initially, the lawyer practices under the lawyer's Home State title. Similar to the Lawyers' Services Directive, Directive 98/5/EC places some limits on the transient lawyer's scope of practice.

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

    However, in modern times the World Bank has evolved into an institution that revolves around alleviating third world poverty through the provision of loans. The World Bank consists of two lending agencies; The International Development Association (IDA) and the Bank for Reconstruction and Development (IBRD)

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

    The US had sought Europe to unite (a wish latterly to be implemented Truman's Marshal plan) and thus Britain was able to entice the US into taking a further lead in British national safety one it was seen to be intergrating (Barker, 1983).

  1. European Union Lobbying.

    sense that the treaties and political practice have assigned to it much greater policy-initiating and decision-making powers than those enjoyed, in theory at least, by national civil services; rather less in that its role in policy implementation is greatly limited by the fact that agencies in the member states are charged with most of the EU's administrative responsibilities."

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

    In the eyes of the Cortes, it could potentially damage delicate legal framework governing the regions. For example, Aragon "had extremely rigid laws regulating the recruitment of troops and their use beyond the frontiers"9. The Union would run counter to this law and upset regional balance.

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