Due Date 11:59 PM EST Sunday Of Unit 5 Points 100 Overview

Due Date 1159 Pm Est Sunday Of Unit 5 Points 100 Overview

This will continue your investigation of the European Union and the trends in the Eurocurrency market. Instructions: After watching the video, Euro Doomed? Bloomberg QuickTakes, do some research on your own from reliable sources and address specific questions:

  • What was the reasoning behind the creation of such union and the of the Euro currency?
  • Please explain your perspective with facts from your research.
  • What are some of the dangers for the global economy associated with the Brexit?

Requirements:

  • Minimum of two pages in length, excluding the Title and Reference page.
  • APA format, including an in-text citation for referenced works.
  • At least three resources.
  • In this course, only one late submission will be accepted per term with no penalty as long as the assignment is submitted within one week of the due date. It is the students' responsibility to inform the instructor of a late submission. Please reference the assignment guidelines and rubric. Be sure to read the criteria by which your work will be evaluated before you write and again after you write.

Paper For Above instruction

The creation of the European Union (EU) and the adoption of the euro currency represent pivotal developments in fostering economic integration among European nations. The primary reasoning behind establishing the EU was to promote economic cooperation, political stability, and peace among historically conflicted countries. After World War II, Europe sought to rebuild its fragmented economies and prevent future conflicts through economic interdependence. The euro, introduced in 1999 as a common currency, was envisioned to facilitate seamless cross-border trade, stabilize prices, and strengthen the EU's economic influence globally (Baldwin & Wyplosz, 2012).

The economic rationale was to eliminate exchange rate volatility, reduce transaction costs, and enhance economic efficiency through monetary policy coordination. The euro consolidates member states' monetary policy under the European Central Bank (ECB), aiming to achieve price stability and economic growth. Additionally, a unified currency bolsters Europe's position in the global financial system, promoting a cohesive economic identity and attracting foreign investment (European Central Bank, 2020).

However, the integration and creation of the euro have not been devoid of challenges. The global financial crisis of 2008 exposed vulnerabilities within the eurozone, such as fiscal disparities and divergent economic performances among member countries. Notably, crises in Greece, Spain, and Italy revealed the dangers of a monetary union without fiscal integration—leading to austerity measures, high unemployment, and social unrest (Lane, 2012). The Brexit referendum in 2016 further underscored these vulnerabilities; the United Kingdom’s decision to exit the EU demonstrated the potential for political and economic disruptions that could challenge the stability of the entire union (Hobolt, 2016).

Brexit poses significant dangers to the global economy. Economically, the UK’s withdrawal introduces uncertainties in trade, foreign investment, and supply chain stability, especially given the UK's significant role in global finance and trade. According to the Bank of England (2019), Brexit-related uncertainty has led to a decline in investment and currency volatility, which could hamper economic growth. Furthermore, Brexit risks encouraging other member states to pursue similar exit strategies, threatening the cohesion and integrity of the EU's economic and political stability. Such fragmentation could weaken the euro's global standing, impair policy coordination, and increase market volatility (Baldwin & Wyplosz, 2012).

In conclusion, the creation of the EU and the euro aimed to foster economic stability, political cohesion, and global influence among European nations. While these initiatives have achieved many mechanisms of economic integration, they also harbor vulnerabilities that were highlighted during financial crises and political upheavals such as Brexit. The threat of disintegration underscores the importance of addressing fiscal disparities, enhancing fiscal union elements, and managing political risks to sustain the benefits of a unified Europe and a robust global economy.

References

  • Baldwin, R., & Wyplosz, C. (2012). The Economics of European Integration (4th ed.). McGraw-Hill Education.
  • European Central Bank. (2020). The Euro Area: Monetary Policy and Challenges. ECB Publications.
  • Hobolt, S. B. (2016). The Brexit vote: a divided nation, a divided continent. Journal of European Public Policy, 23(9), 1259-1274.
  • Lane, P. R. (2012). The European Sovereign Debt Crisis. Journal of Economic Perspectives, 26(3), 49-67.
  • Bank of England. (2019). Economic Summary: Impacts of Brexit Uncertainty. BoE Reports.

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