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INSIDE THE EUROZONE

INSIDE THE EUROZONE. The Euro. The euro was launched in 1999 as an electronic currency, and in 2002 as a cash currency. Its creation was not only an economic act, but also a political act designed to help expand the international financial and political reach of the EU.

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INSIDE THE EUROZONE

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  1. INSIDE THE EUROZONE

  2. The Euro • The euro was launched in 1999 as an electronic currency, and in 2002 as a cash currency. Its creation was not only an economic act, but also a political act designed to help expand the international financial and political reach of the EU. • As far as ordinary Europeans were concerned, opinion on the euro was at first doubtful, but then solidified in most EU states. • The euro started out well, with optimistic speculation that it would quickly become a world class currency. • The 2007-10 global economic crisis - followed by the Greek and Irish debt crises – undermined confidence in the currency.

  3. The Fluctuating Euro

  4. The Euro in the World • Immediately upon its creation the euro became the world’s second largest reserve currency, leading to speculation that it might pose a serious challenge to the US dollar. • But after its share of reserves grew to just over 25% it appeared to have settled onto a kind of plateau, lagging well behind the 60-65% share of the US dollar. • Problems include the lack of clear leadership within the European Central Bank and the ECB’s lack of controls over fiscal policy. • The Greek crisis not only revealed the dangers to the eurozone of mismanagement and incompetence in even a single member state, but raised wider questions about the long-term future of the euro.

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