Hot answers tagged

55 votes

If the eurozone budget deficit limit is 3%, why is the European Commission telling Italy it must revise its 2.4% deficit budget?

It appears the problem isn't the deficit (the loss from an individual budget) but the size of the existing debt itself. From a report in the Guardian Italy’s public debt is worth more than 130% of ...
user avatar
  • 20.4k
44 votes
Accepted

If the eurozone budget deficit limit is 3%, why is the European Commission telling Italy it must revise its 2.4% deficit budget?

Italy is not just planning a high budget deficit, it has a very high level of national debt. (As of 2017, it was 131.8% of their GDP, second only to Greece) This makes their deficit riskier than it ...
user avatar
  • 5,716
35 votes

Why is using the euro instead of a local currency such a big deal and why is the wealth of the society an argument?

Investopedia has an article about why some countries prefer not to use the Euro. Countries with their own national currencies may have several advantages in managing economic problems: "They ...
user avatar
  • 13.7k
18 votes

Why is the SNP putting so much emphasis on currency plans?

The SNP's long term goal is independence for Scotland. During the last referendum on the subject, the issue of which currency Scotland would use was an important point of contention. The legal ...
user avatar
  • 17.1k
17 votes

Why is using the euro instead of a local currency such a big deal and why is the wealth of the society an argument?

Possible effects of adopting the Euro: Pro: Poland has significant trade links with Eurozone countries. Adopting the Euro removes an obstacle to trade, since traders no longer have to hedge against ...
user avatar
  • 82k
15 votes

Why was having a common currency in the EU seen as necessary?

The main reason is that the European Union (and before that the European Communities) was intended by its architects to bring about ever tighter integration, possibly all the way to a federal state. ...
user avatar
  • 29.7k
15 votes
Accepted

Why was having a common currency in the EU seen as necessary?

The main reason for a common currency was to remove the business risk which came from currency fluctuations. When a company in country A buys goods or services from a company in country B, they need ...
user avatar
  • 67.3k
12 votes
Accepted

Is there any indication that the Euro rate is being politically manipulated?

The criteria that the US Treasury applies to label a currency manipulator, according to US law Criterion (1) - Significant bilateral trade surplus with the United States. Treasury assesses that ...
user avatar
  • 105k
10 votes

If the eurozone budget deficit limit is 3%, why is the European Commission telling Italy it must revise its 2.4% deficit budget?

As mentioned in previous answers, it is not just about the deficit but also about the already high level of national debt. Furthermore, the Italian government was initially expected to aim for a 0.8% ...
user avatar
  • 201
10 votes
Accepted

Why wasn't Greece kicked out of the Euro once it was clear that they falsified their statistics to join in the first place?

Kicking Greece out would be the same as admitting the politicians had made a mistake. And as you know, they never admit that - at least not voluntary. "Kicking the can and hope the problem disappears ...
user avatar
  • 5,242
10 votes
Accepted

Why do Europeans pay for European products with US Dollar?

When two parties in a trade agree on what is traded, apples for oranges, petroleum for USD, petroleum for EUR, petroleum for apples, and so on, there is no reason why the trade cannot proceed in ...
user avatar
  • 1,442
9 votes
Accepted

Why is the German government now in favour of the possibility of Greece leaving the eurozone?

In 2010, much of Greece government's debt was in the hand of private investors, especially French and German banks and there were serious concerns that a default could trigger a contagion that would ...
user avatar
  • 29.7k
9 votes
Accepted

Were the UK opt-outs of the Euro and Schengen enacted via the Ordinary Legislative Procedure?

To answer what I understand to be the spirit of the question, the two opt outs are to be found as protocol 15 of the Treaty on European Union (Maastricht treaty) for the Euro and the section "Protocol ...
user avatar
  • 20.4k
8 votes

Why is using the euro instead of a local currency such a big deal and why is the wealth of the society an argument?

There are a number of issues that come with adopting the Euro. At the time of this answer the exchange rate is 1 złoty = .22 Euro. The first most obvious issue is people tend not to grasp currency ...
user avatar
  • 13k
7 votes

Under EU law, can Scotland remain or be re-admitted to the EU after Brexit while still a part of the UK?

The answer is a bit similar to the answer to Could the UK re-join EU after leaving? Legally, there is nothing in place to grant automatic EU membership or some sort of smooth path to it. Except if all ...
user avatar
  • 29.7k
7 votes

Under EU law, can Scotland remain or be re-admitted to the EU after Brexit while still a part of the UK?

The Greenland example indicates that EU law is quite amenable to fudging situations. It's also important to remember that the EU is a creation of treaties and can be amended by treaties. A unanimous ...
user avatar
  • 21.2k
7 votes

Can an EU member officially give up pursuing Euro/Eurozone?

It's worth specifically talking about Sweden While UK and Denmark have negotiated Opt-outs, Sweden fits as a country that has basically unilaterally decided not to join the Euro. The Euro ...
user avatar
7 votes

Why is the SNP putting so much emphasis on currency plans?

they would be obliged to join the Euro as soon as the necessary economic conditions were met? The second part of this sentence is doing a lot of work. The criteria are quite onerous and many of the ...
user avatar
  • 21.2k
7 votes
Accepted

Who limits the euro issued in each eurozone country?

Only the ECB has the right to issue Euro banknotes (p. 103). States can issue coins up to a total value set by the ECB. At some point during the initial creation of the Euro, and during the accession ...
user avatar
  • 82k
6 votes

Is there any indication that the Euro rate is being politically manipulated?

Political language is often imprecise, especially recently. The US has put a definiton of currency manipulators into law. While this is US law, and not international law, one might reasonably expect ...
user avatar
  • 82k
6 votes
Accepted

Can an EU member officially give up pursuing Euro/Eurozone?

Can an EU member officially give up pursuing Euro/Eurozone? No (...ish). The current stance of the EU Commission is: All EU Member States, except Denmark and the United Kingdom, are required to ...
user avatar
  • 5,397
4 votes
Accepted

Does the EU frequently review their members to see if they consistently meet the initial criteria?

No one has ever been ousted from the EU. Several of the Maastricht criteria only apply to countries that have not yet joined the common currency. For example, inflation, exchange rate stability, and ...
user avatar
  • 88k
4 votes

Would it be an advantage for Greece to solve the financial crisis by leaving the euro?

The way that Greece would benefit from leaving the Euro is that their currency could adjust to a low value relative to the Euro. This would make tourism and Greek exports cheap stimulating their ...
user avatar
  • 10.7k
4 votes

Monetary policy: why does the dollar work for the US, but the Euro doesn't for the EU?

I can't claim to fully understand all the issues but I find the things Paul Krugman writes about it interesting and convincing. He frequently touches upon the subject on his blog, offering new nuances ...
user avatar
  • 29.7k
4 votes
Accepted

Given that there isn't a fiscal union in the EU, why would the Greek crisis threaten other Eurozone members?

The monetary impact of a default in Greece should be very small in the Euro given that the percentage of GPB of Greece is very small compared to the rest of the Eurozone. However such default would ...
user avatar
3 votes

Monetary policy: why does the dollar work for the US, but the Euro doesn't for the EU?

Quoting Paul Krugman is not helpful, because he never learned to speak English! :-) His blog is a vast accumulation of jargon, essentially designed for a University-level course in Economics. If you ...
user avatar
  • 192

Only top scored, non community-wiki answers of a minimum length are eligible