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Why is Europe forming a monetary union?

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  • Gwen Eudey

Abstract

On January 1, 1999, 11 European countries will officially become a monetary union with one currency, the euro. Forming a monetary union brings benefits, such as increased trade between countries. But it carries costs as well. To join the union, each country must cede its right to set individual monetary and exchange-rate policies. Yet each country?s economic situation may differ from that of its fellow union members. How will these countries--and the union--fare when economic shocks hit, especially shocks that affect one country or region more than another? In this article, Gwen Eudey weighs the benefits and costs of European monetary union and discusses some of the issues involved.

Suggested Citation

  • Gwen Eudey, 1998. "Why is Europe forming a monetary union?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 13-21.
    • Handle: RePEc:fip:fedpbr:y:1998:i:nov:p:13-21
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/1998/november-december/brnd98ge.pdf
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    References listed on IDEAS

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    1. Deskar-Škrbić, Milan & Kotarac, Karlo & Kunovac, Davor, 2020. "The third round of euro area enlargement: Are the candidates ready?," Journal of International Money and Finance, Elsevier, vol. 107(C).
    2. Jeffrey M. Wrase, 1999. "The euro and the European Central Bank," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-14.
    3. Lars Jonung & Eoin Drea, 2010. "It Can't Happen, It's a Bad Idea, It Won't Last: U.S. Economists on the EMU and the Euro, 1989–2002," Econ Journal Watch, Econ Journal Watch, vol. 7(1), pages 1-4–52, January.
    4. Milan Deskar-Škrbiæ & Antonija Buljan & Mirna Dumèiæ, 2020. "Real interest rate convergence and monetary policy independence in CEE countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(2), pages 349-380.

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