Forex Blog: Currency Trading News & Analysis.

June 3rd 2005

European Union in disarray

Two days after France rejected the EU Constitution, the Netherlands followed suit. As the Euro spiraled downward in value, experts have begun to postulate on the future of the European Union. The growing discontent with the EU is drawing attention to some of the problems with the Euro, namely that a common economic policy is not appropriate for a region as large and diverse as the EU. For example, many economists have argued that the European Central Bank should lower interest rates, in order to facilitate growth in Germany, France, et al. However, the ECB faces a dilemma, for many of the EU member economies are actually growing at a healthy rate, aided by low interest rates. The recent rejections have placed the future of would-be members in Jeopardy. Latvia and Lithuania, for example, have already pegged their currencies to the Euro, in anticipation of joining the monetary union. The Philadelphia Inquirer reports:

"They see joining the EU and joining the euro as a route to economic development," Austin said of the 10 new EU members. "The complaints are coming from the founding members, who are asking, ‘What has the euro done for us?’ Unemployment is rising, and they’re looking for things to blame."

Read More: Setback for Euro

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Posted by Adam Kritzer | in Euro | No Comments »

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