Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • Free Essays • My Term Papers • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Miscellaneous EMU EMU The European Monetary Union (EMU) serves as an economic necessity, a complement to the European single market, which is the free movement of people, goods, services, and capital within the European Union (EU). The Euro, a single currency created under ideals of the Maastricht Treaty, will strengthen European unity and constitute as a factor for stability, peace, and prosperity for all member states as well as potential participants like Great Britain. Financial markets in Europe are profoundly affected by the Euro beginning from its launch on January 1, 1999. A single currency encourages more efficient, integrated markets with stronger financial flows and lower financing costs for borrowers. Government bond markets were quickly transformed into a single European bond market. Most outstanding debt and all new debt issued by member states are denominated in Euro to create the second largest market after the US dollar government bond market. This means that financial institutions, payment systems, and clearing systems are operating in Euro and that businesses and citizens can use financial products denominated in Euro, including company shares. Several economic reasons advocate Great Britain’s involvement with the EMU. The overall benefit that the Euro will bring to Britain is a stable economic environment leading to low inflation and low interest rates. Member states achieve savings in four areas: reduction in costs due to the elimination of currency exchange, enforcement of efficiency through healthy competition in Euroland, stabilization of fluctuating interest rates, and creation of employment opportunities. First, uniform currency will help to eliminate the costs associated with currency exchange within the Euro zone. It is predicted that the Euros will produce an estimated saving up to one percentage point of annual EU GDP each year. Second, the use of a single currency will allow buyers to easily compare prices among participating member states, which will stimulate competition across the borders. Tony Blair says, "Price transparency across the Euro zone will intensify competition and expose inefficiencies and other distortions of the single market" (48). In this manner, firms are pressured to cut costs and perform more efficiently in order to stay competitive. Third, interest rates in all participating states will be equalized through the EMU. In addition, since participating member states are perceived to be credit-worthy, the borrowers in that country are likely to benefit from relatively low interest rates. Lastly, The EMU is not a direct source of new jobs, but it definitely creates a new basis for supporting growth and employment. Lower interest rates will encourage more investment and more growth - two essential conditions for job creation. With the Euro offering a much more promising framework for economic growth and job creation, member states are also embarking on the structural reforms which they believe are necessary to remove obstacles to job creation. As soon as the appropriate conditions are met, the United Kingdom should join the EMU due to the benefits listed above. According to Steve Stecklow, Britain's status with the EMU is inactive because "its business cycle is completely out of sync with the rest of Europe," yet maybe it is detached on account of not being a member of the organization. Britain should not wait too long before joining the EMU as the core members will become even more competitive, which may result in Britain lagging behind its partner states. Britain's government should prepare intensively during this Parliament so that it would be in a position to join the single currency, should it wish to, possibly in the next Parliament. Bibliography: Word Count: 586
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