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– The Euro –
Learn English – Lesson 105 – The Euro
The introduction of the Euro is said to be the greatest monetary reform since the one which took place with the rise of the Roman Empire. Seventeen European countries have settled on relinquishing their national currencies and have adopted a common currency labelled, quite aptly, the Euro. First initiated as an accounting currency in 1999, the introduction of the new coinage was carried out in 2002. The Euro was thought up as an essential building block on the road to a more politically integrated Europe. The new money turned out to be a colourful array of notes and multi ferrous coins, minted in each member state and stamped with iconic symbolism denoting the cultural, scientific and architectural traditions of their country of origin. But the colour of any money is rarely as enticing as its economic value.
The establishment of the Euro has decreased the interest rates of most member countries, in particular those with a weak currency. As a consequence the market value of firms from countries, which up until now had a weak currency, has very conspicuously increased and continues to do so to this day. The countries, whose interest rates fell, most as a result of the Euro, were Greece, Ireland, Portugal, Spain and Italy. A unified currency eases trade between different states and a freeze on interest rates curbs any government devaluing its currency. This resulted in strong repercussions on the money market, with fluctuating exchange rates causing havoc with companies making profits abroad.
When the Euro was introduced, few expected it to have to weather the storm of the recent global financial downturn. Between 2008 and 2010 several calamitous fiscal occurrences took place in Europe. Circumspect analysis of particular Eurozone countries uncloak a strong element of instability, many think that the entire European construct (its institutions and currency) has been too damaged by the crisis to get back on its feet and they fear the community might split up. So what incentives does the Euro hold for its users and does the attraction that it once had still hold true? The Euro is backed collectively by the Euro zone states, with some states being economically stronger than others. But is this really what all of the 17 Eurozone countries still want or is there an impulse or even call to let the Euro devolve back into sovereign currencies? There might be some countries which look back with melancholy on their national currency. Below, two equally confused economists grapple with the argument, unwilling to predict the outcome.
Eve Smith: If we are indeed to predict the fate of the Euro, it is high time to look back and examine how the Euro has failed and why we have to call off the whole system. So…One study evinces that the introduction of the Euro has had a positive effect on tourism flows within the EMU, with an increase of 6.5%! This is an indicator of the connectivity that mirrors an increase in trade between member states.
James Levitt: As i’ve already pointed out, it’s also accurate that around 175 million people worldwide use the Euro; that puts it in good stead against both the American Dollar and the Japanese Yen. In its collective usage, the Euro now comprises the world’s second largest reserve currency and with that i’d postulate that all its members are better off.
Smith: At the advent of the current global financial crisis, the exchange rates of the Euro initially fell, only to regain later, below it’s maximum value but above it’s lowest value. This also shows that the Euro has some resilience.
Levitt: The Euro certainly has strength when measured on the global money markets, and this can be perceived as an incentive for investment. That’s all well and good, but for individual member states participation might not be so lucrative. Take the case of Greece by way of illustration.
Smith: Greece was spared from defaulting through the help of other European countries but predominantly by the IMF (International Monetary Fund). Notably Germany and France have had to step in to save it. This process was the first in several other botched rescue attempts by the stronger members in other countries, which I dare say incurred a lot of lost funds!
Levitt: For countries such as Greece, living under the yoke of the Euro policy makers may bring years of grinding austerity measures. They may yearn for a reinstatement of an independent and decentralised policy that is coordinated much closer to home. After all, the Drachma was some thousands of years old and a return to that age old tradition might be welcomed.
Smith: Be that as it may, one thing that is abundantly clear is that breaking away from the Euro would be politically costly, technically challenging and economically strenuous.
Levitt: True enough but ever since the time of Croesus (the mythical minter of the first true gold coins), money has changed form almost as much as it has changed hands! Who’s to say if it can stand the test of time?
If the time calls for it, we may change, pick and choose or buy and sell our currencies. But the Euro is meant to be permanent and not a fleeting monetary fad. No matter what the form, all currencies are a definition of a promise and coinage is the emblem, the means and the physical representation of secure trade. If the currency is to live up to the promise that the Euro Zone leaders have made, reforms may be required in all its member countries, including those with strong finances and current account surpluses. The Euro is proving beyond doubt to be rather costly for some but, on the other side of the coin,a separation from the Euro Zone would seem even worse. Eurozone members are at present stuck between a rock and a hard place!
Interactive Video Comprehension Quiz 1:
Summary Statements Comprehension Quiz 2:
Drag and Drop Quiz 3:
Read the safety and security section of the guidelines.
ALLITERATION of the ‘S’ sound.
Every man and every woman must check in their own luggage.
ANAPHORA with the repetition of “every”.
I am so starving that I could eat an elephant.
HYPERBOLE with such an exaggeration.
It’s not that hard.
LITOTES with “not”.
The White House declared…
METONYMY instead of saying “US government” or “the US president”
There was a loud bang.
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