Eurozone Integration - Performance and Risk to the National Economies

Author:Adrian Petre
Pages:505-511
SUMMARY

Given the theoretical basis of achieving monetary union and the legal framework of euro adoption, this paper aims to analyze the advantages and disadvantages arising from the adoption of the single European currency - Euro, and the implications of the single currency on individuals and businesses. Also, in this paper we highlighted the situation of Romania regarding the introduction of the single ... (see full summary)

 
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Performance and Risks in the European Economy
505
Eurozone Integration - Performance
and Risk to the National Economies
Adrian Petre1
Abstract: Given the theoretical basis of achieving monetary union and the legal framework of euro adoption,
this paper aims to analyze the advantages and disadvantages arising from the adoption of the single European
currency - Euro, and the implications of the single currency on individuals and businesses. Also, in this paper
we highlighted the situation of Romania regarding the in troduction of the single currency and its implications
on the Romanian economy.
Keywords: euro adoption; economic risk; euro effects
JEL Classification: O110
Introduction
Euro is the best candidate for the role of the single currency and can not be replaced with any other
currency whatever the short-term benefits would be. Euro will be especially a credible competitor for
the dollar money market. The creation of euros could accelerate tilting movement of the dollar to the
euro in the long term and gradually. Nearly three years after its launch, the euro has become the
second most widely used currency after the dollar. This situation reflects the legacy of the old
currencies of euro area countries, which were replaced by euros and results also from the economic
weight of the eurozone in the world economy. The deepending of euro internationally is intended to
serve to deepen cooperation based on proximity and convergence in foreign policies of key partners
worldwide.
The Risks and Implications of Euro Adoption
Changeover involves a number of risks, among which the most important results from the persisting
disparities between countries in the budgetary, fiscal and social protection. Besides taking
harmonization measures, countries that have adopted a single currency will be characterized by
dangerous fiscal and social competition to attract investors that would result in loss of jobs in one
country or another. Harmonisation is required also because, once the switch to the single currency,
countries will not be able, as hitherto, to resort to competitive devaluation to boost exports or to
1 Faculty of Theoretical and Applied Economics, Academy of Economic Studies Bucharest, Romania, Address: Piaa
Romană 6, Bucharest 010374, Romania, Tel.: +4021 319 1900, Corresponding author: adrian.petre21@gmail.com.

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