THE EUROPEAN MONETARY UNION

When several states make the agreement to accept besides their own currencies or instead of them an unified currency as their legal tender then a monetary union has arisen.

The various membership states within the European union have agreed by contract that there should be an European monetary union. The Euro is accepted as the new unified currency and supposed to be the solely legal tender within Europe.

THE REASONS FOR A MONETARY UNION ...

THE DOMESTIC MARKET

Along with the Euro comes the so-called boundless freedom for any citizen of a state which consented to the contract of the European monetary union. There is the freedom of establishing a business on your own or get employed in any membership state. The same applies to studying and retiring and, of course, travelling and shopping.

THE FINANCIAL & WORLD MARKET

As far as the economy within Europe is concerned, an unified currencylike the Euro lessens expenses considerably and consequently enablesthe economy to flourish. Many currencies, on the contrary, bring aboutcontinually altering rates of exchange which take bad influence on the import and export within Europe. Only an unified European currency can maintain itself succesfully on the world market in the future, according to specialists of this issue.

THE LABOUR MARKET

Industries are forced to be competitive which results in sticking to one principle: Highest production with lowest expenses. Consequently, there are more and more modern machines replacing labour workers provitably. Another measure contributes to a growing unemployment rate as well. Due to lower wage claims, industrial branches of developed countries are established in less industrialized countries.

An unified currency will influence the trade within Europe positively. Trade expenses decrease because there are no losses through different rates of exchange and the domestic market will be invigorated by the free trade within Europe. The Euro is expected to keep up the already existing jobs and augment the chances for new ones. The unemployment rate would gradually decline.

...AND THE OBJECTIONS RISEN

ARE THERE COMPLICATED RATES OF EXCHANGE ?

The rates of exchange of the several European currencies into the Euro are laid down on the first day of the monetary union. Each currency has its own rate of exchange depending on the worldwide value and power it represents. The different rates of exchange may complicate the process of exchange into the Euro.

IS THE ADJUSTMENT TO THE EURO A LOSS OF MONEY ?

The adjustment is no loss of money even though at first glance it seems to

be like that. The rate of exchange for the DM into the Euro lies between

1,95 and 1,97 which means the value of the DM and the Euro is equal if:

- an amount of DM is divided by 1,95 or 1,97 (rounded 2)

- an amount of Euro is multiplied by 1,95 or 1,97 (rounded 2)

Examples:

2 DM : 2 = 1 Euro 2 Euro * 2 = 4 DM

50 DM : 2 = 25 Euro 50 Euro * 2 = 100 DM

1050 DM : 2 = 525 Euro 1050 Euro * 2 = 2100 DM

THE EURO REPLACES THE CURRENCIES OF ELEVEN COUNTRIES

- Austria - France - Netherlands

- Belgium - Italy - Portugal

- Germany - Ireland - Finland

- Spain - Luxembourg

CRITICS FOR THE ENTRY INTO THE MONETARY UNION

ECONOMICAL CRITICS

- Low rate of inflation	- Low interest
During the past decades the DM	A relatively permanent stability of
has proved its stability which is	the economical development depends
an aim the Euro must achieve as	on low interest. Long-term capital
well. The several states taking	investments with high interest are
part in the European monetary	signs of an attempt to settle high
union have to show equally low	currency depreciation and show also
rates of inflation. Today, all the	mistrust from the capital investors
states of the union have a common	towards the economical development
interest in the stability of prices.	of the respective country.

- Stable rates of exchange

Several currencies have to show stable rates of exchange over a longer

period to take part in the monetary union. Fluctuations on the rates

of exchange of several currencies indicate the different economical

developments of the respective countries. A preceding step into the

monetary union is the agreement of several states on stable and

unchangeable rates of exchange.

BUDGET CRITIC

- Public debts

The gross inland product of a country is the economical performance of

a country. The annual new indebtedness of a country is measured in

proportion to the gross inland product of the same year. A certain

percentage of public debts of a membership state of the European

monetary union is not to be exceeded otherwise the certain state may

not enter into the union.

STABILITY OF THE EURO

IS THE EURO GOING TO BE AS STABLE AS THE DM ?

The stability of the Euro can not be foreseen. Formerly, when the DM was brought in, best prerequisites were made which resulted in a stable currency.

The Euro has gone the same way and therefore has a chance to achieve stability and aquire standing throughout the world as the DM.

IS THE EURO KEEPING UP EVERYTHING THE OLD WAY ?

MY OPINION

It is said that the Euro will not change anything except that now there will be only one common currency for all the states which entered into the monetary union. In everyday life things will be managed with the Euro which is going to be the solely legal tender after three years of rearrangement. Contracts of any kind made in former years are not cancelled or changed because of the Euro.

A great hope is put in the Euro. There are apparently many advantages concerning the Euro which put any possible objections in the wind. The Euro

is compared with the DM and its stability including the countless efforts and prerequisites which might have been the same in number if not even more. To

be brief, the Euro has obviously had a good start.

There is one point which may be an obstacle for the Euro on its way ahead. I

will use Germany and its currency to explain the issue properly. Contrary to

the DM the Euro is a currency not only for one country but for many. Europe

may be considered as an unity of several states supported through the Euro yet the people and cultures within Europe include but a mixture of life styles and contradictions. The German people are indentifying themselves with their

currency. They had worked hard to achieve a flourishing economy in Germany which made the DM an outstanding currency of power on the whole world. The DM stands for the German nation and the Euro for many states in Europe.

Will people of several cultures work as well together for the Euro as the people from Germany did for the DM? Is it the feeling of one people and one common language the key for success or the unity of many nations and cultures?

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