Title: Benefits Of Single European Currency - Free Coursework from Essay.uk.com
Headings: Benefits of single european currency
Benefits of single european currency
Examine the potential benefits to European manufactures and consumers of single European currency

Content: Most goods purchased today include a proportion of foreign components and, therefore, of costs linked to the multiplicity of currencies. The elimination of these costs will help reduce prices and raise the purchasing power of the consumer proportionately. Lower interest rates as the EU central bank cuts interest rates and the EU being such a large area where there is a great diversity in the amount and type of markets available would attract many new firms in. Thus domestic firms would be at advantage as these foreign firms would invest and come up with new products which they in turn could follow their lead thus reducing investment costs. Another benefit is that the removal of exchange-rate variations between the countries of the EU would provide much more assurance to corporate location decisions. At present, a company takes account of the risk of exchange-rate variation in its location decision, and this may lead it to 'scatter' its plants across the various economies, to hedge against the risk of exchange rate variation. Removing this source of uncertainty allows investors to locate according to economies of scale and may lead to more plants of optimum size, a reduction in unit cost of production, and increase in efficiency.coea ear seeaeaw orea eak inea foea ea! The most clear-cut benefit of a single currency is that it will no longer be necessary to incur the costs of exchange from one currency to another. Travelers know that these costs are not negligible. First of all, there is a commission charge (usually a fixed amount);