On the 1st of January 1999 the euro became the official currency of over 300 million Europeans in 11 of the world's most developed nations. Austria, Belgium, Finland, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal and Spain have all opted to gradually phase out their national currencies and join the euro-zone, in a move that will lead to the largest European monetary union since the Roman Empire.
The concept of a single European currency is not a new one. It wasfirst proposed in the 1970s but was abandoned until 1991, when it was given the go ahead by the European Union. This decision was taken with the view of completing the single market for goods, services, people and capital in Europe, and of enhancing the welfare of citizens within the EU. Since then there has been an on going debate over the soundness of this decision and the effects it is likely to have on both the European and World economies.
One of the most obvious advantages of the euro is the resulting ease of transactions across the countries of the EU. For businesses this means that they no longer have to pay the hedging costs, which they do today in order to insure themselves against the threat of exchange rate fluctuations. Businesses will also find it easier to expand their operations within the member states. This is because rather than having to set up separate accounting systems, banks, etc. for transactions in countries other than their native one, the euro will make it simple to operate from a single central accounting office and use a single bank.
The elimination of exchange rate variations would benefit consumers as well. Consumers would not have to change money when traveling within the euro zone, and would encounter fewer problems and legal constraints when transferring large sums of money across borders. Travelers and tourists would also no longer be forced to change their money into other currencies and pay banks the com…