Pros And Cons Of The Euro

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Nevertheless, the US dollar is followed by a competing second candidate currency : the Euro. The Euro is the currency shared by 17 member states of the European Union (EU). Around 330 millions EU citizens now use it as their currency and enjoy its benefits, which will spread even more widely as other EU countries adopt it. It is therefore not surprising that the Euro has rapidly become the second most important international currency.
In this section we will assess the possibility for the euro to become a dominant global currency rivalling the U.S. dollar in the future ; and in the same time see what impact the euro crisis has had on the Euro as a currency.

As a result of the creation of a single trading market and the formulation of the single currency, the Euro, the Eurozone has become a major trading power in the world (http://europa.eu/about-eu).
The EU’s trade with the rest of the world represents approximately 20% of global trade. Moreover, the EU is actually the world’s biggest exporter and the second biggest importer of goods and services (http://europa.eu).
Though, on average the euro’s share within the different international markets is still clearly smaller than the US dollar’s.
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The first is that the EA still has a very fragmented banking and capital market, which makes it more difficult to fully exploit economies of scale and of scope and network externalities. The second is that the EU and the EA are only unions of independent nations and not a federal state, consequently it will be extremely difficult to overtake the US dollar and maintain a dominant international role while the governance and institutions of the EU and EA remains unchanged. Indeed, countries inside the EA share the same currency, but they do not have a stated common policy regarding the economy. Therefore the EA is far from being a true monetary

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