The European Union
University of Phoenix
The European Union
The banding together of nations to form an economic and political stable is not a new concept. However, the European Union is unique in that its members encompass most of the European continent. “The EU has delivered half a century of peace, stability and prosperity, helped raise living standards, and launched a single European currency, the euro” (European Union, n.d., para. 5). The European Union also maintains a strong relationship with the United States and other countries not located in Europe, fostering international ties. As the European Union faces an unprecedented financial crisis, the further integration of European ...view middle of the document...
Seventeen member states of the EU utilize the Euro and each country has their own centralized bank. These banks are the capitol stockholders of the ECB. From the ECB, the European Financial Stability Facility (EFSF) was created in 2010 as a temporary mechanism to aid member states in financial crisis. Later that year, the European Stability Mechanism was created to provide a more permanent aid organization (EFSF, 2013).
The internal, or single, market of the European Union allows for the easy and quick movement of people, services, goods, and money throughout the member states. “To create this unified market, hundreds of technical, legal and bureaucratic barriers that stifled free trade and free movement between the EU's member countries were abolished in a series of reforms, culminating in 1993” (European Union, 2013, para. 3). The abolishment of these barriers opened up businesses to a customer base of over 500 million people. However, member countries still maintain their own individual tax codes and this severely limits full financial integration. Because of the massive financial failures of member countries like Italy, Greece, and Cyprus, it is unlikely that stronger member countries like Germany and France will allow the EU to take full control of their financial systems.
Effects of the Euro
“The euro, often signified by €EUR, is the currency used in 17 members of the European Union, as well as regions such as Montenegro, Kosovo, Andorra and more” (Gocurrency.com, n.d., para. 5). Not since the Roman Empire has there been such significant monetary reform. After the American dollar, the euro is the second largest reserve currency and the second most traded currency. If treated as one single entity, the Eurozone is not much different than the United States or the United Kingdom, using one type of currency. However, when the individual countries are examined, the euro takes on a different outlook.
Germany has been praised internationally for its economic stability and responsibility. However, it has been suggested that Germany’s praise is merely a result of their national character and not actual numbers. “For much of the news media—not only in continental Europe’s ‘virtuous’ north, but also in the United States—the euro sovereign debt crisis could be summarized in the form of this morality play opposing national or regional stereotypes” (Rosenthal, 2012, para. 1). Germany frequently exceeded the Maastricht Criteria, which states that public debt must not exceed 60% of the nations GDP. In fact, from 2000 to 2009, Germany’s percentage was more than 80% and only dipped below the criteria once (Rosenthal, 2012). Still, Germany has yet to see the hard times that other nations were faced with during the European Sovereign Debt Crisis.
The European Union is constantly striving to integrate other nations as member states....