Identify and discuss the costs and benefits of joining the Economic and Monetary Union (EMU)? Do the benefits outweigh the costs?

Abstract:

“EMU is seen as a mean to recover some influence over European monetary affairs.” (François Mitterrand, 1992) The idea of an EMU appeared in the Werner Report in the 1970s in which France has played a major role. Indeed, the French social democratic president François Mitterrand wanted the European Union and its member-states to have a stronger influence in the world compare to the US dollar which has been widely used as the standard measurement for all currencies. This has led the president of the European Commission at time, Jacques Delors, to turn the idea into a concrete proposal. Advocators of EMU stressed that it is essential to create a stronger European Union with greater economic, political and social cohesion; however others do( didn’t ) not support this stage of the European Union’s construction such as the United-Kingdom, Denmark and Sweden.

In Europe, the existence of different national currencies was considered as the remaining barriers for a barrier-free single market and the influence of the dollar pressed the European Union (EU) to form an Economic and Monetary Union (EMU). The EMU is a type of trade block involving a single market and a common currency. At the European scale, it involves a single European market within its borders and the adoption of the Euro.

Economists usually refer to the EMU as an economic trade off between perceived benefits and cost of joining the area[1]. There are a diverging views on the extent of these costs and benefits, and therefore, especially on the question whether to join the EMU or not. The aim of this paper is to analyse the key issues surrounding the EMU, positively as well as negatively. The case for or against the EMU requires a careful analysis of the economic pros and cons at both national and firms level.

In this paper, we will demonstrate that the pros