Eurozone Essay Example | Topics and Well Written Essays - 3500 words

Eurozone - Essay Example The eurozone is the subset of European Union member states, which have adopted the euro (Eurozone 2005). There are 12 member countries in the eurozone: Austria, Belgium, Finland, France (except pacific territories using CFP franc), Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain (Eurozone 2005). The rapid and smooth transition - and the successful logistical operation involving the transfer of billions of euro notes and coins to banks, retail stores, and vending machines - is a boost for the European Central Bank (ECB), which masterminded the operation (Schifferes 2002). When the 12 member states that currently comprise the eurozone gave up their currencies in favour of the euro, the European Central Bank took on the responsibility of monitoring monetary policy for the eurozone (Eurzone and the single currency 2005). Euro notes and coins is now being use by more than 300 million eurozone citizens. Monaco, San Marino, and Vatican City also use the euro, although they are not officially euro members or members of the European Union (They previously used currencies that were replaced by the euro.) They now mint their own coins, with their own national symbols on the reverse. These countries use the euro by virtue of agreements concluded with European Union member states (Italy in the case of San Marino and Vatican City, France in the case of Monaco), on behalf of the European Community (Eurozone 2005). Likewise, Montenegro and Kosovo, which used to have the German mark as their de facto currency, also adopted the euro without having entered into any legal arrangements with the European Union explicitly permitting them to do so. They use the euro instead of the Serbian dinar, mainly for political reasons (Eurozone 2005).The other 13 countries of the European Union that do not use the euro are: Denmark, Sweden, the United Kingdom, and the ten member states that joined the Union on 1 May 2004; namely Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. Denmark and the United Kingdom got special derogations in the original Maastricht Treaty of the European Union. Both countries are not legally required to join the euro unless their governments decide otherwise, by either parliamentary vote or referendum (Eurozone 2005). Surrendering monetary policy to the European Central Bank (ECB) is an act of political will, and current members of the eurozone are still besieged with its economic consequences (Ezoneplus 2004). There are 31 nations, states and territories using the euro, including seven French and five Spanish overseas territories, two Balkan states, Kosovo and Montenegro, and strangely enough Cuba, where the Euro has been designated as the official currency at one of the biggest beach resorts. The rest of Cuba uses the Cuban peso, which is tied to the US dollar (Robinson 2002).Since the adoption of the single currency by the eurozone countries, there are wide variations in the economic performance of the individual states in the eurozone. There was supposed to be increased convergence of the economic cycles of individual eurozone as the euro stabilised. However, this did not come to past (Eurozone and the single currency 2005). Moreover, the eurozone economy is still greatly influenced by the per formance of the