abhishreshthaa
Abhijeet S
ADVANTAGE OF THE EURO
European decided to establish a single currency in the Eu for a number of reasons. First, they believe that business and individuals will realize significant savings from having to handle one currency rather then many.
For example people going from Germany to France will no longer have to pay a commission to a bank to change deutshe marks into francs. Instead, they will be able to use euros.
Second and perhaps more importantly, the adoption of a c0mmon currency will make it easier to compare prices across Europe.
This should increase competition because it will be much easier for consumers to shop around. For example, if German finds that cars sell for less in France than Germany, he may be empted to purchase from a French car dealer rather than his local car dealer.
Third, faced with lower prices European producers will be forced to look for ways to reduce their production costs to maintain their profits margins. The introduction of a common currency of European companies.
Fourth, the introduction of a common currency should give a strong boost to the development of a highly liquid pan-European capital market. The development of such capital market should lower the cost of capital and lead to an increase in both the level of investment and the efficiency with which investment funds are allocated .
this could be especially helpful to smaller companies that have historically have difficulty borrowing money from domestic banks.
Finally , the development of pan-European euro denominated capital market will increase the range of investment options to both the individuals and institutions .
for example it will now be much easier for individuals and institutions based in , let’s say, Holland to invest in Italian and French companies.
European decided to establish a single currency in the Eu for a number of reasons. First, they believe that business and individuals will realize significant savings from having to handle one currency rather then many.
For example people going from Germany to France will no longer have to pay a commission to a bank to change deutshe marks into francs. Instead, they will be able to use euros.
Second and perhaps more importantly, the adoption of a c0mmon currency will make it easier to compare prices across Europe.
This should increase competition because it will be much easier for consumers to shop around. For example, if German finds that cars sell for less in France than Germany, he may be empted to purchase from a French car dealer rather than his local car dealer.
Third, faced with lower prices European producers will be forced to look for ways to reduce their production costs to maintain their profits margins. The introduction of a common currency of European companies.
Fourth, the introduction of a common currency should give a strong boost to the development of a highly liquid pan-European capital market. The development of such capital market should lower the cost of capital and lead to an increase in both the level of investment and the efficiency with which investment funds are allocated .
this could be especially helpful to smaller companies that have historically have difficulty borrowing money from domestic banks.
Finally , the development of pan-European euro denominated capital market will increase the range of investment options to both the individuals and institutions .
for example it will now be much easier for individuals and institutions based in , let’s say, Holland to invest in Italian and French companies.