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'The European Single Currency project was a bad idea from the start and ought to be abandoned.' Critically examine this statement.

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Introduction

'The European Single Currency project was a bad idea from the start and ought to be abandoned.' Critically examine this statement. In December 1991 the Maastricht Treaty paved the way for the European Central Bank (ECB) and the European Single Currency - the Euro. On the 1st January 1999 11 member countries replaced their national currency for the European single currency. The single currency is thought to bring Europe closer politically and economically. ...read more.

Middle

Some of these arguments are political but most are to do with the effects a single currency can have of the economies of the membering states. A common view towards the EMU is why should a stable currency which is not facing any foreseeable downfalls be replaces with a currency to which only predictions can be made about its success? The first argument against the Euro which is going to be discussed is commonly known as the 'One Size Fits All'. ...read more.

Conclusion

As an example if there is a decline in Britains exports there would be an automatic depreciation of the pound which would cushion the effect of the economy. However if there is no pound and only Euro then the cushioning effect will be lost as the decline in exports will be specific to Britain. If the countries are having the same currency it seems a logical step to have fiscal integration to follow. This idea is intimidating and makes the prospect of the nations loosing sovereignty even more realistic. ...read more.

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