Concept in Definition ABC

As its name already indicates, the euro zone or eurozone refers to the set of European Union countries that share the same currency, the euro. Since January 1, 1999, the traditional currencies of Europe (the peseta, the lira, the franc and others) were no longer used to make way for the second international currency after the dollar.

Although not all members of the EU share the euro (the Danish krone and the British pound sterling continue to function independently, although in the case of Denmark there are plans to a future referendum on the matter), the rest of the countries bet on the new currency and a small group of nations will soon do so (for example, Estonia, Bulgaria, Latvia, Hungary and Sweden).

Single currency reasons

Historically Europe has been a continent with many internal conflicts (singularly between France and Germany), but at the end of the Second World War it was felt that it was necessary to create a strong bond between the major nations of the continent. These ties of union have been materializing since the creation of the EU in a series of agreements: with respect to coal and steel, the abolition of tariffs, a common parliament, a

politics of scholarships and exchange culture, freedom of movement of citizens and capital, etc. These and other advances have been shaping a conscience from citizenship European, all a achievement if it is compared with the permanent confrontations between nations throughout history.

In the 1990s it was understood that it was necessary to consolidate the EU and for this reason a shared currency such as the euro was proposed and the draft of the euro zone.

Advantages and disadvantages of a single currency

Analysts and economists coincide in pointing out a whole series of advantages of the euro zone. First, in an increasingly globalized world, it is necessary to have a strong currency to act as a counterweight to the dollar. It is considered to be beneficial in maintaining a moderate level of inflation. At the same time, stability with respect to exchange rates and greater transparency in prices is achieved. This monetary stability is also an incentive for investors. Likewise, we must not forget some practical aspects: European citizens can travel more easily on the continent itself and the economic activity in general it is more fluid.

Although the advantages are obvious, there are analysts who are not totally convinced about the desirability of the euro. In this sense, some emphasize the loss of national sovereignty and financial autonomy, since the central bank European is the body that imposes the criteria to be applied to the euro and in relation to the economic measures of the European Union. The sector of Europeans opposed to the single currency and the EU itself are known as Eurosceptics.

Photo: iStock - Peter Hermus

Issues in Euro Zone