The Euro dates back to January the 1st 1999 when it became a legal currency for the participating European countries, known as the Eurozone. However, at this point the notes and coins from the old currencies could continued to be used and it wasn’t until the 28th of February 2002 that national currencies ceased to be legal tender in their respective countries.
The Eurozone originally consisted of 11 countries but now stands at 15 with the most recent countries to adopt the Euro being Cyprus and Malta on the 1st of January this year.
All European Union members are eligible to adopt the Euro if they comply with certain monetary requirements, relating to areas such as inflation rates. When the Euro was first conceived the Maastricht treaty obliged all the members of the EU to adopt the Euro. However, the UK negotiated an exemption from that requirement for itself.
The government at the time said that it wouldn’t consider adopting the Euro until it is clear that it would be in the country’s economic interest to do so. This would be judged by looking at five criteria.
The Governments Five Criteria
The first criterion was whether there can be sustainable convergence between Britain and the countries in the Eurozone. This involved looking at areas such as the housing market and business cycles.
Secondly the government looked at whether there was sufficient flexibility to cope with economic change. This would be done by examining labour markets and the impact of fiscal policy as an economic stabiliser.
Thirdly, the government looked at the effect on investment such as the cost of capital involved in the transition.
The government also looked at the impact adopting the Euro would have on the financial services industry by looking at factors such as why financial services companies are located in the UK.
Finally the government looked at whether the change would be good for employment.
The government at the time concluded... [continues]
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(2008, 10). Should the Uk Join the Euro?. StudyMode.com. Retrieved 10, 2008, from http://www.studymode.com/essays/Uk-Join-Euro-170817.html
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