In the 1970’s, first proposals for a single currency evolved but it was not until the Treaty of Maastricht in 1992 that the plan was actually drafted and signed establishing the framework and timetable for the EMU. The road to the EMU has been one of the most ambitious, complicated and important events of the 20 th century and found its completion on January 1 st 2002 as 11 countries converted their national money into one currency – the euro. An economic powerhouse with 300 million inhabitants and a GDP of 6. 6 billion $ was created on par with the United States.
The goal of a single market was achieved by eliminating the last administrative barrier to ensure the four fundamental freedoms – mobility of capital, goods, people and services. The introduction of a common monetary policy with the foundation of the ECB and a single currency had and “will have important consequences” for the business environment within the euro area. While only time will tell what the actual effects are, there have been alterations and benefits identified in the short time since the start of the EMU that indicate an economic revolution. Indeed, there are areas where the euro dramatically influenced and shaped the business environment, although the most significant of these are likely to take years to deploy as corporations, governments and markets adapt to EMU but “still, over time, the revolution will roll forward rapidly.” Price stability has been anchored in the treaty of Maastricht as the main objective of the single monetary policy. Alongside the tight budgetary control for member states, the ECB followed the German Bundesbank’s conservative politics to achieve a downward convergence of the inflation rate in the euro zone over the last years (see Figure 1) – 2.
The Essay on Euro European Currency Nations
The Most Interesting Event The progress of the Euro was the most interesting event occurring throughout this period. Never before has a currency united so many powerful economic nations. It is very interesting to see the progress it has made and changes it has influenced. In 1991 it was decided that the Euro would be introduced. It officially became the currency of eleven European nations: ...
2 % in 2002. The benefits of price stability cannot be underestimated as high inflation and inflation uncertainty as well as future inflation expectations lead to a misallocation of resources. Maintaining low inflation rates enables significant efficiency gains for businesses and is the basis for long – term growth as future prices and revenues become more predictable. Especially in countries like Italy, Spain or Portugal that have a track record of monetary instability, EMU reduced not only inflation rates but vice versa interest rates have come down significantly reducing the cost of debt for companies and sparking investment.
“Every single economy in the Eurozone has a better monetary policy than it did before.” In addition, the move to a single currency eliminated the transaction costs and risks, including commissions, the bid / offer spread, overall cash management costs, the uncertainty of future exchange risks and the risk of real rate exchange variations, involved when dealing with different currencies. The assurance of business transactions is no longer required within the euro zone allowing concrete business planning and an increase in the quality of predicting future prices for goods and services. Furthermore, the euro marks the beginning of greater transparency throughout Europe not only in terms of prices, as the additional layer of protection for national producers has been removed, costs and wages but also of the framework created by states to attract investments. EMU leads to a much more integrated European market and competitive environment as costumers tend to purchase goods and services across boundaries and companies find it easier to expand into markets enhancing the quantity and quality of intra – European trade and investment. “Intra-European trade should fairly quickly double or even treble in volume.” Competitive pressures and an enlarged market result in significant productivity gains, due to an improved resource allocation, and encourage consolidation, innovation and rationalisation of industries as businesses capitalize on economies of scale and scope and seek to obtain an advantage over their competitors. Four years into the euro era, the European industry landscape has been in a process of transformation as a wave of cross – border mergers and acquisitions (see Figure 2) swept and investment opportunities by European and foreign companies have been seized across the euro zone.
Galvor Company Business Plan
Case 10-3: Galvor Company Background Galvor Company was founded in 1946 by owner, and president M. Georges Latour. The company had acted as a fabricator, buying parts and assembling them into high quality, moderate-cost electric and electronic measuring and test equipment. Latour had always been personally involved in every detail of the firm's operations as in most family businesses. Fiscal ...
“Intra-EU direct investment has risen significantly since the start of EMU. In the year 2000, it actually rose by 50 percent.” Companies restricted to their borders in the past are quickly adapting to the new environment and metamorphosing into European entities. Yet, the greatest achievement of EMU has been the development of the European capital market. Starting from nothing four years ago, this has become the largest financial market worldwide and in many terms represents a truly integrated single market.
Different currencies, that have characterised European bond and money markets in the past, acted as a barrier of competition and led to a fragmentation into various national capital markets, do not longer exist. Since the existence of the euro the financial sector has been in a process of extensive restructuring and shaken in its foundations due to: . intensified cross – border competition, . the disappearance of a highly profitable area of business for credit institutions – foreign exchange trading, . modern financial technology, .
the creation of a multi – trillion euro bond and money market, . the establishment of the euro as the reserve currency next to the dollar and. the emergence of new business, investment and product opportunities. This development unleashed market forces that provided the capital market with greater transparency, more depth and liquidity, significantly reduced costs of issuing and trading, stimulated the diversification of financial products and enhanced credit risk management.
The Business plan on Sas Institute Risk Market European
... a more competitive European Union (EU), and increased foreign investment." There are benefits for companies outside the EU too. Business with Europe ... Inc. , is about to become a reality on the European market. Our company will base its distribution on strategic alliances with ... as new products and funding possibilities (bonds, for example) become available in the euro. One of the keys to success will ...
Companies benefit from decreasing financing costs and increased alternatives of financing as they capitalise on a broader capital market for corporate debt and equity “In the corporate market, well-known companies such as Philips have launched big benchmark issues, and even a few small, unrated companies such as Ducati have issued bonds successfully.” . With all corporate bonds and shares are quoted in euros and without the currency risk, investors can now easily identify the best investment opportunities across the euro zone and see Europe as “one large entity rather than a collection of individual countries.” EMU has been a huge achievement for Europe. Price stability, market transparency, elimination of barriers simplifying investment and trade and the creation of a single market have resulted in various benefits and challenges for businesses and ignited a process of change and transformation. Thus, the real impact of EMU is the fundamental structural change in the European business and political landscape it caused and will cause to achieve a fully integrated European economy in the future.
As markets rather than governments determine today’s business world, an economic environment has to be created that matches the capabilities and conditions of the American and Asian rivals to achieve long – term growth, a secure European future, a reduction in unemployment and significant welfare gains.
