Is the euro a good idea?
The euro is the official currency of 19 countries in the European region and is the second most traded currency in the world after the American dollar.
Here is a list of advantages of the euro:
1. No currency exchange fee: A common currency leads to abolition of currency exchange charges when trading across borders.
2. Common financial ecosystem: A common currency means that all the involved states can trade more economically among each other, have similar financial policies (esp. related to currency), and similar financial setups. This also leads to parity in the prices across the eurozone.
3. Lower Inflation: A common currency also leads to lower inflation, especially since the euro is based on keeping tabs on national deficit.
4. Lower interest rates: A common financial ecosystem leads to extra cash with the banks and coupled with lower inflation leads to lower interest rates. This leads to higher consumer surplus.
5. Tourism: A common currency also means that tourists can go across various parts of the eurozone without incurring the expenses of currency exchange, resulting in a higher tourist turnout.
Although there may be some negative impacts of a common currency to some economies, as a whole, the introduction of Euro as a common currency is a good idea.