Euro From The Relationship Between Economic Integration And Monetary Integration

Euro's birth on the New Year's Day of 1999 is looked upon as a great event in both areas of economic integration and international monetary system. Thus the long-termed dispute on the maturity of Euro's forming conditions finally ended up. However, Euro depreciated dramatically in the past two years, which evoked a new round of investigation and research on this brand-new currency. As the unique money of an economic and monetary union, the exchange rate of Euro is affected by the common factors like the output, interest rates and the balance of payment. It is also greatly influenced by the special elements, such as the degree of European economic integration, the coordination of financial and monetary policies, and so on. In view of that, this thesis begins with the argument of the interactive relations between the economic and the monetary integrations and goes on to discuss the heated questions about Euro. Brief introductions of the theories of Customs Union, Common Market and Optimum Currency Areas are made in the first chapter of the article. Then interactive relations of the two integrations are deduced: the course of economic integration raises the request of monetary integration, and the progress of the latter in turn does good to the former. These two should develop in harmony. Chapter II puts great emphasis on the inter-motivated movement of the European economic and monetary integrations, which revealed the inevitability of Euro's birth and its effects at present and in the future. Chapter III gives a concise portrait of the systematic arrangements in EMUIJI, including the European system of central banks and the fiscal system stipulated in the European Union Treaties. It provides references for the analysis of the stability and outlook of the Euro currency. In the last chapter, reasons for the fluctuation of Euro are give by the author. Besides the some superficial reasons like the sharp contrast between Europe and US, the unbalanced development of the integrations is the crucial cause. In light of the comparison between cost and benefit brought by entering the Euro Zone, the members won't leave at ease. However, the newly-born Euro still has a long way to go towards the goal of becoming a hard international currency.