If the UK were to join the Euro (Single European Currency), what would be the benefits and disadvantages to companies operating in the UK?
Seminar paper from the year 2004 in the subject Business economics - General, grade: 1, University of Abertay Dundee (University), course: Treasury Management, 7 entries in the bibliography, language: English, abstract: The idea of a Single Currency for Europe Learning from the Second World War, six European countries started working together on economic terms within the European Coal and Steel Community1. The overall idea was later on to create a large Community which would form a big market and give benefits to all of those dealing within that market. A common currency would make trade a lot easier among the different European countries, and first plans for a common currency already came up in the 1960ies. Introduced in more detail by the Werner Plan in 1970, the European Communities set up a modest European Monetary System (EMS) in 1979. “The principal feature of the EMS was an Exchange Rate Mechanism (ERM) of ‘fixed but adjustable exchange rates’”. 2 The system included exchange rates between all participating countries which allowed the currency to fluctuate within set margins of 2.25% against each other. The EMS also included the formation of a new virtual currency, the ECU. It “was formed as a ‘basket’ or ‘average’ of EC currencies, weighted according to their relative share of EC GNP.”3 There was some kind of coordination between national decisions on monetary policy on European level4 for the involved countries. Closely linked to a single currency is the Single European Market, which was agreed on in 1986 and put into force in 19925. It abolished non-tariff barriers and set the basis for free movement of capital, goods and labour. Establishing the SEA also changed the political system of the European Union as this was a big step towards the introduction of a single currency. This coursework shall look at Britain’s role within that process of developing Europe towards a Common Market first. As the Stage II & III of the Monetary Union started6, Britain executed its opt-out possibility. It will If the UK were to join the “Euro” (Single European Currency), what would be the benefits and disadvantages to companies operating in the UK? therefore discuss benefits and disadvantages to multinational companies and financial institutions of adapting the Single Currency.
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