As the world economy becomes more globalized, it is expected that economic integration will continue. There are 6 stages of
economic integration: (1) preferential trading agreements, (2) free trade agreements, (3) customs unions, (4) common market,
(5) economic and monetary union, and finally, (6) complete economic integration. Therefore, the European Union has come a
long way, reaching stage 5 in 1999. It is the major monetary union of the approximately 20 monetary unions in the world
today, and it is referred to as the European Economic Monetary Union, or EMU. The euro has become as important as the U.S.
dollar and is being discussed as the next international currency, either replacing the U.S. dollar or sharing the position
with the U.S. dollar as well as perhaps an Asian currency, such as the Japanese yen or Chinese yuan. For example, several
countries are buying and selling oil in euros rather than U.S. dollars, which makes sense, given the majority of the oil
transactions involve countries that use the euro. Other areas of the world are considering monetary unions, such as Southeast
Asia and North America. Many countries’ central banks hold U.S. dollars for transactions involving oil and other
international transactions, which also helps support the value of the U.S. dollar.
Library Research Assignment
Your firm is expanding into Europe, and your department head has asked you to put together a report on monetary unions in
general, include the following:
• Discuss the advantages and disadvantages relative to a nation maintaining its own individual currency.
• Discuss the EMU and the euro in detail, including the following:
• its history
• the countries involved
• its implementation
• how it has functioned over the last decade, noting any issues that had to be overcome
• How did the International Monetary Fund (IMF) reassign the special drawing rights (SDR) as a result of changing from
several European currencies to the euro?
• Discuss whether the EMU helped or hindered the development of the European Union.
• Conclude the report with a brief discussion on the possible advantages and disadvantages of the amero, a possible common
currency for Canada, Mexico, and the United States, which has come up in the press from time to time. Discuss why you would
favor or be against a common currency for North America.