The advantages that the member states have are worth an elaborate description and this would be followed shortly. First however lets first mention the euro and the European Monetary Union. The Euro, which is a common currency shared among 16 out of the current 27 member states has had a significant impact onto the union body. Around five countries also generally accept the currency even if they do not recognize it officially. Naturally as European Union constitutes some of the most major countries of the world, their medium of exchange has a significant impact onto the exchange market. It is arguably, the second most traded and important currency of the world after the U.S. Dollar.
Although accepted by all the euro accepting countries, the European Monetary Union constitutes of 12 countries out of the 27. They share policies and affects. The member states act as a unified economic body and their macro and micro implications and choices are termed and analyzed as one.
The first and foremost advantage of the same currency policy is indeed the reduction in transaction costs. To do business, even with the neighboring countries, one has add on additional amounts to the host country so that one’s currency is received there. It was estimated that to do business, the member countries used to spend around 1.5 billion pounds every year to buy and sell foreign currencies so that the visiting people could have money at their disposal. This however was more problematic for the members were naturally inclined to trade with their neighboring countries so as to cut on the transportation costs. However, the cost of transaction eventually reduced the amounts of revenue generation and profits and left them less motives and inclinations to trade. The same currency policy however, by the introduction of the Euro, gave the members the liberty to practically go along the border and do business with the same money that was in his/her pocket