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Currency Competition in the Eurozone: An Answer to the Crisis

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  • Spirzewski Krzysztof

    (University of Warsaw WNE, Poland)

Abstract

The common currency was created as a result of theoretical considerations regarding the functioning of optimum currency areas. This theory refers to a number of benefits as well as costs. It imposes a number of requirements that are necessary for the newly created structure to be considered optimum. The economies of Eurozone countries did not meet these requirements. In consequence, the present functioning of the Eurozone encounters many disturbances - the strong differentiation of the balance of payments is a significant example. The reforms initiated in the European Union and undertaken in response to the financial crisis encompassed the Eurozone countries, yet they only concern financial policy. The adopted strategy of action arouses questions as to its effectiveness. The aim of this article is to present one of the reasons for the Eurozone crisis and a proposal for changing the monetary policy, in particular the exchange rate. In view of this objective, the main hypothesis reads as follows: one of the methods of counteracting the crisis is to introduce currency competition within the Eurozone.

Suggested Citation

  • Spirzewski Krzysztof, 2016. "Currency Competition in the Eurozone: An Answer to the Crisis," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 12(1), pages 12-20.
    • Handle: RePEc:vrs:finiqu:v:12:y:2016:i:1:p:12-20:n:1002
    DOI: 10.1515/fiqf-2016-0132
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    References listed on IDEAS

    as
    1. Mongelli, Francesco Paolo, 2002. "ìNew" Views on the Optimum Currency Area Theory: What is EMU Telling US?," Royal Economic Society Annual Conference 2002 140, Royal Economic Society.
    2. Papageorgiou, Theofanis & Michaelides, Panayotis G. & Milios, John G., 2010. "Business cycles synchronization and clustering in Europe (1960-2009)," Journal of Economics and Business, Elsevier, vol. 62(5), pages 419-470, September.
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