Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Question

Quizplus · Accepted Answer

Adoption of the euro eliminates currency fluctuations, making it easier for firms to compete and trade within the EU. However, it also means that individual countries lose their ability to manipulate their own currencies and interest rates during economic fluctuations.

Adoption of the Euro as Both a Medium of Exchange