Monetary Union

There are many pros and cons in the world having a monetary union. I believe that having a monetary union is more beneficial. Over the summer, I went to Germany and Czech Republic, both having their own currency. Germany used Euros as their form of currency, while Czech Republic uses Crowns. I dealt with exchange rates and banks.

Some of the advantages are that a single currency should end currency instability in the involved country. By having one currency, the world is set up for a greater potential for growth. Consumers would not have to change money when traveling across borders. Changing money is a waste of valuable time to consumers. Business would no longer have to pay hedging costs which they do today in order to insure themselves against the threat of currency fluctuations. A single currency should also result in lower interest rates as all countries would be locked into one form of money.

There are also many disadvantages in having a monetary union. There are many different languages that are spoken throughout the world, especially in Europe. When countries are locked into one monetary union, each country’s economy could be different. Widely differing economic performances are a huge disadvantage. Loss of national sovereignty is the largest disadvantage of a monetary union. The transfer of money would mean that the economically strong and stable countries would have to co-operate with weaker countries, which are more tolerant to higher inflation. This means that a countries’ economy could be brought down due to another country in the monetary union being weak.

Greece and its private creditors are in the process of completing a “debt swap” in order to bail the country out and avoid an uncontrolled default. Greece is now considered to be "junk" by the ratings agencies, meaning it has a very high chance of defaulting. S&P has cut its debt seven times since 2009, from A to CC, the third-lowest rung on its rating scale. If Greece does not complete...