As severe and devastating as the September 11 terrorist attacks the US economy has changed. This is the first tme that the US Dollar hs a strong competitor, the Euro. The Euro is currency money, which is intended to come into operation on January 1, 1999 and replace all separate currencies of the individual countries of the European union. The decline of U.
S. stocks and a series of scandals about the trustworthiness of earnings reports are a major force driving the dollar down. The euro has risen steadily against the dollar since the start of the year following concern about prospects for growth of the US economy, corporate profits and share prices, and in responce to a rise in the US current account deficit. Diminished growth expectations pish the dollar lower because investors who want to unload U.
S. holdings must sell dollars to move investments to other countries. The relative importance of th two economies is mute point. Both the EU and the US are essential to the world economy. You ca not look at the value of the dollar vs.
EURO in terms like that. For in stace the Brit ihs pound has been worth more than the dollar. The US econ mu is weak, but I do not think that it is so weak that the dollar will be that devalued by the end of the year. However if the US economy continues with problems, one possible solution to strength the US economy should be the merging of the Dollar with the Euro. The introduction to a singlr currency for the Unite d States and Europe will produce both economic benefits and economic costs. First, single currency reduces the transaction costs of buying and selling goods because you do not have to convert money from one currency to another.
The Term Paper on Central Bank Euro Currency European
... soon become the second most important reserve currency after the US Dollar. Capital Market. The large Euro zone will integrate the national financial ... a recession, a country can no longer stimulate its economy by devaluing its currency and increasing exports. With these and other pros ... America as the place to be, not only for its economy but for its laws, taxes and institutions make corporate purchase ...
Second, the single currency enables individuals and businesses to carry out economic transactions more efficiently. Third, there also macroeconomic benefits from having a single currency. Single currency encourages international trade, and reduces the disruptions that result from currency fluctuations. Ano the benefit of introducing a singlr currency for the United States makes economic transactions easier than having a different currency in every state of the union. Finally, a single currency would be that individuals and corporations would have greater economic choice.
The single currency would encourage trade which could un turn place pressure on governments to reduce the barriers to trade that currently exist between countries, and force governments to reduce structural barriers to trade.
