• 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 competences of the European Parliament were lightly reinforced. The main compromise agreed was to adopt measures guided to the progressive establishment of a common market over a period that would conclude on 31st December 1992. This would mean an area without obstacles to free movement of goods, people, services and capitals.

  2. The Institution of the European Union and Theories.

    The Germans have adopted the single currency and the country has the unmissable museums and art galleries. The majority of Germans class them selves of being Catholic, there are also other religions such as Islam and Judaism. German is considered to be the second most richest country in the world with one of the most effective education systems.

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

    Catalonia, however, seemingly reluctant to repel the enemy, signed a separate treaty with the King of France, in 1640 and handed him Philip's title of Count of Barcelona. It became obvious that the strategy was inherently flawed as it presumed that all areas of Spain were equally endangered from the same common threat.

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

    Banks and other financial institutions are also concerned that IAS 39 will not match their internal risk management models. Hence, there is large opposition amongst financial institutions about IAS 39. The European Commission has acknowledged this and is therefore allowing companies to opt-out of the most controversial parts of IAS 39.

  2. The question of whether Britain should gravitate toward adopting the euro is indeed an ...

    It will throw up major challenges for the banking and retail sectors that could prove costly in the short-term. As things stand now, Britain is "cyclically out of step with the euro-zone: joining now would be bad for Britain and, bad for the existing members, which are in enough trouble already" (The Economist v.

  1. What does citizenship mean in the European context?

    capable of denunciation, covering well-circumscribed subjects. Historically, such treaties were concluded by heads of state embodying the sovereignty of the nation-state. Under the more modern version, such treaties are concluded by a government answerable to a national parliament often requiring parliamentary approval and subject to the material conditions of the national democratic constitution.

  2. The Euro

    * Stage two began on January 1, 1994 and marked the establishment of the European Monetary Institute (EMI). The EMI was responsible for coordinating the monetary policy and strengthening the cooperation of the central banks as well as making preparations for the establishment of the European System of Central Banks, which included the single monetary policy and single currency.

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