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Money Change Case Study

Money Change Case Study
(1). What are the implications of the establishment of the euro for (a) European consumers, (b) businesses based in the EU, and (c) businesses based elsewhere in the world?
According to the European Union, the benefits of the Euro include creating a single marketplace for consumer goods and services, making travel between European countries easier, creating a single financial market, integrating European countries politically, creating a macroeconomic framework, and advancing Europe’s international role (Rey, 2007). The benefits touted by the EU have been evident in the six years since the currency began circulating.
Transactions between the businesses in participating countries are done with a common currency with the same ease as transactions between states within the United States. As a result of adopting a common currency, participants have increased coordination with key securities in the government bond market and financial integration between member countries has increased as well. The financial markets in the euro participating countries have become more liquid, integrated, and diverse since the euro was adopted (Rey, 2007). It also benefited the businesses based elsewhere in world for same reasons such as ease of transactions and reducing the exchange rates.
(2).In your view, do the advantages of the euro outweigh its perceived disadvantages? Be sure to justify your answer.
The advantages of the euro outweigh its perceived disadvantages. Because the Euro replaced the currency used by so many individual countries and has been the subject of unilateral and bilateral exchange rate agreements, the Euro has become the second most important currency in the world, with the potential for competing with the US dollar. Equity price correlation has increased between participating countries since 2002. Non-participating countries have not seen the same increase in equity price correlation. A previously nonexistent corporate bond...