Advantages Of The Euro Currency Essay Example | Topics and Well Written Essays - 1250 words

Advantages Of The Euro Currency - Essay Example The greatest advantage of the Euro is that there is regional currency stability due to the fixed exchange rates. The Euro has led to price stability within the EU characterized by low inflationary trends and stable public finances. This has increased the credibility of the Euro due to large currency zone thus stability against the speculation. This credibility is reinforced by a common monetary policy that is governed by the European Central Bank. Currency stability has encouraged trade as there is a reduction in both external and internal currency instability. The single currency eliminated the risks involved in exchange rates making importers and exporters better placed to make accurate growth projections in foreign markets. Businesses no longer pay hedging costs as insurance against currency fluctuations. They are also spared against the costs incurred as a result of accounting across currencies. Small businesses are the greatest beneficiaries as they would otherwise incur greater costs as a result of currency fluctuation, unlike large multinationals that enjoy the benefits of economies of scale. This has encouraged entrepreneurs and Small and Medium Enterprises (SMEs) operators' to trade beyond geographical boundaries and expand their businesses (BBC News, 1998). The single currency has encouraged tourism as people are spared the task of currency exchange thus red tape procedures are eliminated. This means that tourists are not at risk because of carrying huge sums of money and do not encounter extra charges because of commissions (BBC News, 1998). It has enabled individuals to trade beyond their geographical locations and compare prices. The internet has made this even better as one can easily shop for the best offer on a product or service.