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Essay / Research Paper Abstract
This 66 page paper examines the issues influencing the British and Swedish decision regarding potential membership to the European single currency. The decision to join the Euro is not only economic, in addition to the many advantages brought by a reduction in barriers, such as the elimination of transaction costs and exchange rate risk and increased transparency, there are also disadvantages. These may include the lost of power by nation state central banks, and as such a loss of control over local economies. However, joining the single currency is also a greater level of political integration, which may have further reaching impact on financial markets in divergent ways, not only as a result of direct economic policy. This paper looks at the background, development and philosophy behind monetary union, the tools used to control and stabilise the union, including the convergent criteria, and considers the potential political, social and economic results. Against this the potential membership of Sweden and the UK is examined and a conclusion reached. The bibliography cites 34 sources.
Page Count:
66 pages (~225 words per page)
File: TS14_TEUKSwedeu.rtf
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Unformatted sample text from the term paper:
FREE TRADE AREA? 24 3. THE EURO 32 3.1 THE BENEFIT OF STRENGTH IN NUMBERS 32 3.2 GOVERNING A SINGLE CURRENCY 35 3.3 REGULATORY AND LEGAL ISSUES 40 3.4 CULTURAL INFLUENCES 50 4 APPLYING THE POTENTIAL ADVANTAGES AND DISADVANTAGES TO THE UK
AND SWEDEN 51 4.1 MEETING CONVERGENCE CRITERIA. 52 4.2 STAYING WITHIN CRITERIA. 55 5. CONCLUSION 67 GLOSSARY 69 REFERENCES 69 1. Introduction " The introduction of the common European currency was ultimately by no means only an economic
decision. It was an original political act to hand over sovereignty over one of the most important areas of national authority to a European authority.....For this reason alone, monetary union
requires of us Europeans decisive advances in the field of political integration " (Gerhard Schroder, German Chancellor, quoted at no-euro.com, 2004). An important political issue that the governments of
both the UK and Sweden need to address will be the long term prospects for joining the single European currency. Sweden has already rejected the joining of the single currency
with a referendum, the UK has not held any such referendum. The reluctance to join may be seen as sentimental attachment to a national currency and a fear of
change on the part of the electorate. Despite the public feeling it is also a mistake to assume that the opposition is due to emotional response which is not underpinned
with logical one reasoned thought. There are many theoretical benefits to joining a single currency bringing the barrier to trade down. Benefits such as increased transparency making international trade and
investment easier, the reduction of transaction costs and exchanges rate risks are attractive to commercial interest. However, there are also some potential difficulties, including the implications of financial control passing
to the European Central Bank (ECB). This equates t a loss of control over the national economy. The adoption of a single currency
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