What Are The Advantages And Disadvantages Of Single Currency

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Mainly when the single currency rate takes place, all countries are likely to be bounded with the currency related. When the European nations tend to set the pricing of the currency, other country will follow the currency rate and perform trading transaction accordingly. This process indirectly controls the market and Central banks in other respective countries are losing their power in making decisions and controlling each market as the prices for the trading follows the single currency. Single currency usage however causes some further problems as this concept has its disadvantages. This concept requires single monetary policy as the interest rates are being set centrally for all Euro nations. For example, a country is facing downturn in its economic activity, whereby the other countries are performing well and booming. In this situation, the Central bank may make changes and increase the interest rates, in this situation, well performing countries may use small currency unit to do transaction with the country that is facing economy downturn. This will increase the profit for the booming whereby the country which is facing economy downturn. Economy downturn will worsen the situation into recession and dampen the growth of the economy and more tolerant to higher inflation Forex money traders, bankers, financial institutions will be redundant. The nation would loss its national sovereignty. This would even lead to the bankruptcy of the country.Single global currency usage
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