Explain and Evaluate the advantages and disadvantages of the single currency:
Advantages:
1) Elimination of Exchange Rate risks; using the same currency ensures there is no danger of the value of a good changing between when a good in bought and when payment is made, increasing trade.
2) Price Transparency; it is easier for consumers and firms to compare prices and so get the best value for money.
3) Long-term planning; information is clearer for just one currency so it is easier for firms to more accurately plan for the future.
4) No transaction costs; when there is only one currency, there are no transaction costs, so money is saved and trade increases.
5) Single Monetary Policy; the ECB sets one interest rate, so there is increased certainty for firms when borrowing money for investment.
6) Employment; One currency makes free movement of labour easier.
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