unrestricted international trade in the world’s single most important market, the market for money itself, it is considered one of the euro’s core economic benefits. Together with the four primary and direct benefits attained from the euro, there are also other economic benefits that are more indirect. They involve: macroeconomic stability, lower interest rates, fundamental structural reform, the creation of a new global reserve currency, and increased economic growth. The euro has brought macroeconomic stability to unstable European nations. Many of the EEC’s fifteen member countries have battled inflation. “This confuses buyers and sellers, increases borrowing costs, raises the effective tax rate, sends negative signals to investors, and creates gross market inefficiencies.” However, the euro has introduced a new regime of low inflation and macroeconomic stability from many Euroland countries. According to some experts, this is virtually guaranteed because Euroland now possesses the most independent central bank in the world, the European Central Bank (ECB). Central banks steer a country’s inflation rate by using a variety of monetary policy instruments to lower or raise the general level of demand. The more independent a central bank, the less likely it is to succumb to the political pressures of its government to allow an economy to grow too fast or to finance excessive public expenditures which in turn leads to lower inflation. Yet history has shown that the central banks of many Euroland countries are not immune form political influence. That is precisely why the euro may be able to maintain long-term regional stability.Lower interest rates are another one of the larger economic goals that the EEC is hoping that the euro will achieve. To the extent that the euro lowers inflation, it also exerts downward pressure on interest rates. Investors buy bonds only if they are sure that th...
