Should Spain Stick to the Euro?
There are both advantages and disadvantages to having a single currency. Recently, the economic behaviour in Spain has proved an example of the cons faced with a single currency. In 1999 when Spain initially adopted the Euro, the country experienced economic growth as there was more money to support private sectors. However, though it initially helped Spain, it is now hurting Spain as having a single currency means that the strength of the currency is dependent on all the economic performance of all countries using the currency. As a result, there is very little competition in the market. The country can not act on its own and therefore it can not directly combat the problems it may face. So, as a result of the single currency, Spain is enduring an “internal devaluation”. This could potentially lead to greater unemployment.
In all, though Spain may have a gained some advantages in the beginning, it is not a question of whether Spain should stick to the Euro or not.
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Main ideas covered ok. Have look at Oat’s blog.
Comment by Peter Anthony | December 14, 2010 |