Title: How Exchange Rates Work | HowStuffWorks
Headings: How Exchange Rates Work
How Exchange Rates Work
The Cost of Money
A Brief History of Exchange Rates
Methods of Exchange
The Floating Exchange Rate
Find a Floating System
The Pegged Exchange Rate
Hybrids
The Euro

Content: Some of the euro's advantages, in regard to economics, include: Elimination of exchange-rate fluctuations - The euro eliminates the fluctuations of currency values across certain borders. Transaction costs - Tourists and others who cross several borders during the course of a trip had to exchange their money as they entered each new country. The costs of all of these exchanges added up significantly. With the euro, no exchanges are necessary within the Euroland countries. Increased trade across borders - The price transparency, elimination of exchange-rate fluctuations, and the elimination of exchange-transaction costs all contribute to an increase in trade across borders of all the Euroland countries. Increased cross-border employment - With a single currency, it is less cumbersome for people to cross into the next country to work, because their salary is paid in the same currency they use in their own country. For more information on exchange rates and related topics, check out the links on the next page. Advertisement
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