Critically Assess Whether Monetary Union Within The EU Has Been Essay

Critically Assess Whether Monetary Union Within The EU Has Been Successful And Discuss Suggested Changes Which Could Be Made To - Essay Example It will also lay out some of the discussion regarding the debt crisis and the importance of the European Central Bank in the current situation. The Success of Monetary Union within the European Union The Economic and Monetary Union (EMU) has been extraordinary in the contemporary history of the European economy and was successful in altering the international economic landscape. Following a decade of its release, the Euro was successful in offering steadiness with regard to businesses along with the national economies. The Euro protects against tentative sprints in relation to the national currencies. A sole monetary policy that was adopted for the Member States, which was united with synchronized global fiscal policies, was capable of promoting macroeconomic steadiness. The EMU successfully encouraged Europe of economic integration and also amplified investments, financial incorporation and cross-border business. EMU within the EU also facilitated in enhancing the budgetary discipli ne and even took care and stabilised the repositioning of the exchange rate which were known to upset the European economy at regular intervals in the past (European Union, 2009). The EMU had even augmented the EU’s flexibility to unfavourable jolts and facilitated in promoting management of the international economy by the EU. Besides these the tangible advantages that were generated by the EMU gave rise to or created strong public finances and strengthened the worldwide position of Euro (European Union, 2009). Discussion of the Problems and the Suggested Changes By entering the Euro zone, European countries lost their monetary independence and also their central banks, which in cases like that of the current crisis would back the countries’ sovereign bonds. This is a drawback of the European monetary system and the European Central Bank (ECB) should be allowed to â€Å"stand behind solvent and sovereigns with unconditional and unlimited liquidity† (The Economi st, 2011, p. 65). Whether Germany can accept this situation is still to be seen, but it should admit the implications and get ready for a breakdown of monetary union or try to act in symphony with other various member states. A parallel, although not obvious, could be traced with Argentina’s debt issues a decade ago. Argentina had its peso fixed to the dollar, maintaining something close to a monetary union with the US. In 2001 to early 2002 it suffered a debt and currency crisis leading that country to default. Source: (Hugh, 2011). However, this has not been an option for Greece. German finance minister holds the keys to the money printing machines. The German Chancellor needs to be approached to receive consent for the reason of printing money. Therefore, this trims down the prudence enjoyed by the Portuguese government, but the ways by which the Eurozone gets affected owing to this still need to be explored. In order to further comprehend the aspect, help of an assumption can be taken. For instance, a Chinese