Title: Single Currency: Pros a& Cons
Headings: Advantages and Disadvantages of a Single Currency.
Advantages and Disadvantages of a Single Currency.
Content: A survey in the past found that a unit of currency say 1 French Franc would lose 40% of its value after if it is exchanged into each of the 12 national currencies then used in the European Community (before the formation of EU). This also encourage trade across borders in this single currency area. A Euro for example eliminate the extra accounting costs needed to keep tract of different and fluctuating exchange rates among trading partners within the single currency area. This reduced cost of trading within the single currency area and thus stimulate more trade. Price Transparency. Within the single currency union, all prices would be quoted in the same currency and this facilitate easy price comparison. Firms no longer could mask their high prices in local national currencies. Consumers could now compared the Euro prices of say coffee powder in Belgium and the Netherlands with ease. This supposed to encourage more cross borders businesses. This would also encourage firms to improve their efficiencies and competiveness in the single currency area.