The Euro Currency Market
The European Union's currency, the euro, "is now in use by 12 nations with a total population of 300 million people in an economic zone two-thirds the size of the US economy" (Posen, 2005). According to Posen (2005), since its introduction on January 1, 1999, the euro has been readily accepted both at home and in global capital markets. "Several nations in eastern Europe and around the Mediterranean are eager to join the euro zone or peg their national currencies to the euro" (Posen, 2005). So far the euro has proven to deliver low inflation and interest rates throughout the Continent. Euro banknotes are the same in every country. Coins differ between countries in that each nation is permitted to have one side carry a stylized design. The reverse side of the coins is the same in every country (The use of Euro, 2007). Euro banknotes and coins are issued by the European System of Central Banks, which includes the national central banks of the participating Euro countries (The European Union FAQS, 2007). Since the Euro's beginnings in 2002, its use has increased globally, as evidenced by the number of non-EU countries participating in its use; however, the dollar is still the dominant international currency (Rey, 2007). 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 five years since the currency began circulating. 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...
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