| EURO |
The Euro
Currency:
History and Adoption (continued)
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| Adopting countries had a strong incentive to move forward
because of significant inadequacies of economic base conditions such
as their public services infrastructures. They saw the euro as a
solution to streamline infrastructure improvements. Conversely, Great
Britain did not have the same inadequacies and therefore predicted
that adoption of the euro would erode the quality of the same infrastructure
categories. "In February 2002, the Government was warned by the European
Commission that if they were inside the euro, they would have had
to cut spending on public services by £10 billion to comply with
the spending rules of the euro " (Ref). |
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Most alarmingly, people controlling euro economic policy are not elected
officials. Great Britain highly values their ability to vote out those
in control of economic policy when it is determined that they are not performing.
They feel that adopting the euro erodes more than the economical base;
it erodes the political base as well. "In the Eurozone it is openly admitted
that the aim of the European Monetary Union (EMU) is political union. A
single currency is the first step towards a single state. Inside the euro,
economic decisions would be made by unelected officials in Brussels and
Frankfurt" (Ref).
OPINION
Smaller countries with detrimental infrastructures and economic bases are highly
motivated to have a single currency. Fundamentally, one of the major advantages
of an elective political system is that the people have the control to correct
incidents of corruption and poor leadership. By its very nature the architecture
of the way people are put into the position to control the euro is missing
the correcting mechanism as a part of its structure. Commensurately, how
can a major economic power such as Great Britain, Sweden, or Denmark safely
adopt such a system without elected officials? Could it be possible that
if the wrong person gained power over euro economic policy that the whole
system could collapse?
Although the arguments presented in this paper do not apply to all three
countries that opted out of the euro, they are representative of some
of the key issues and concerns they all faced. The major reasons given
by Great Britain indicated they were primarily concerned with economic
factors, followed closely by the political concern of not having the
right to elect the officials that control euro economic policy. The British
community wanted to remain in control of their economy so they could
quickly respond to changes in their economic environment. Furthermore,
they wanted to ensure they did not go through the same economic turmoil
as they experienced when the British pound was linked to the Exchange
Rate Mechanism. After weighing the pro's and con's Britain, Denmark,
and Sweden concluded that the risks associated with adopting the euro
far outweighed the proposed benefits. As a result, they chose to continue
to use their national currency and still do to this day.
WORK CITED
German
Embassy. Euro Timeline. 2001. Online 2/22/04.
German
Embassy. Why the Eruo? Objectives of European Monetary Union. 2001.
Online 2/22/04.
Hill, Charles W. International Business. New York: McGraw-Hill/Irwin, 2002.
no. Ten
Reasons to Keep the Pound. Online 2/22/04. |
