It also discusses the expectations that the euro area has placed on the adoption of a single currency.
Part II presents the effects of the euro in international business and trade as the second largest currency in the world economy. It also looks into the use of the euro outside the euro area and the Iranian Oil Bourse.
Part III presents differing views on the effects of the euro on the economies of the member states in the euro area. It also presents the effects of the euro on the different stock markets of the member states. Empirical data on the effects of the euro are discussed in Part IV, presenting data from 2002 to June of 2006.
Parts VI and VII looks into the stand of the United Kingdom (UK) on the adoption of the euro. It discusses the criteria set by UK which the euro has to pass before its adoption. Also discussed are the possible effects should the UK adopt the euro, presenting the differing sides of the issue.
The European single currency may trace its origins back to a the vision of an even more united Europe enjoying economic prosperity, where the people, services, capital and goods move freely across member countries. This was first translated into words in the Treaty of Rome on 1957. The Marjolin Memorandum, a European Commission document, issued in 1962, was the first Memorandum to open possibilities toward Community level "economic and monetary union". The idea of a distinct monetary identity once again surfaced in the Barre Plan submitted by the European Commission in 1969. Taking this vision a step further, the Single European Act (1986) and the Treaty on European Union (1992) introduced the Economic and Monetary Union (EMU), the third phase of which begun with the setting of the exchange rates of the different currencies (European Central Bank, 2004).
Also, the proponents of the Single European Act introduced the Single Market which is seen to promote greater economic integration among member states. However, it is seen that this can only be fully achieved with a single currency. A single currency is expected to ensure price transparency, eradicate exchange rate risks, reduce transaction costs and ultimately increase the economic development of the euro area. (European Central Bank, 2006) Also, having been beset with poor economic growth since the 1970's, the launch of the euro as the single currency of the EMU member states was expected to address the causes of the problems of high inflation, high interest rates, and unsustainable public finances which are characteristics of exceedingly regulated and fragmented markets. The EMU was expected to pave the way for greater macroeconomic stability and improved economic efficiency in the euro area. (European Commission DG-EFA, 2004).
On 01 January 1999, the common currency is adopted by Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, and Finland, with Greece subsequently joining on 01 January 2001Two years hence, on 01 January 2002, euro notes and coins were introduced. Of all the European Union member states, only Denmark, Sweden, and the United Kingdom opted not to adopt the euro as