If the UK joins the eurozone, monetary policy ﬂexibility may reduce while exchange rate risk will increase.

Question

Quizplus · Accepted Answer

Joining the eurozone means the UK would adopt the euro and monetary policy would be set by the European Central Bank, reducing monetary policy flexibility. However, exchange rate risk within the eurozone would decrease as there would no longer be currency fluctuations between the UK and other eurozone countries.

If the UK Joins the Eurozone, Monetary Policy ﬂExibility May