by Aaron Dollhausen

Created on: August 03, 2009

The primary factor driving the European Union is to unify the economic interests of the European countries in order to reduce the chance of widespread armed conflict amongst them. In order to achieve this goal, the majority of European countries have banded together for the common purpose of sharing foreign relation, security, and economic policies.

By adopting a single currency, the Euro, the member of the European Union hope to accomplish many things, according to the article "The Euro: Who Wins? Who Loses?" by Jeffrey Frieden. As high inflation troubles the economies of nonaligned European countries and other countries such as the United States and China, a single currency is hoped to act as a buffer against high inflation. This buffer would work when high inflation countries bind their currencies to low inflation countries in hopes to lower inflation for all members of the European Union.

To truly provide for regional security, members of the European Union establish broad links between countries. This would further European integration.

By adopting a single currency, European countries hope to eliminate the cost associated with changing currencies. This will serve to benefit tourists and companies who trade with countries that have adopted the Euro.

A common European currency eases price comparison in different European countries because all prices would be in Euros. This would allow companies to expend less money in their search for raw materials which would ultimately lower prices on consumer goods.

By fostering exchange rate stability and adopting a single currency, member nations of the European Union seek to attract interest from large multinational corporations. A single currency would build confidence in investing and leader to greater trade and economic growth. This is furthered by the belief that a single European market would provide protection from currency fluctuations and outside competition.

Long overshadowed by the American dollar, the Euro could emerge as a fierce rival. In doing so, countries which adopt the Euro as its currency hope to topple the American dollar as the favored currency throughout the globe. If this goal is achieved businesses and governments alike will look upon the Euro as having more value than the dollar.

The financial sector of the all member nations of the European Union would benefit it two ways: The first way would be through inward investment. Such inward investments could increase as companies outside

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