what and why are countries switching to the euro.?

Question

this can start a war

Answer 1

How the hell can it start a war.

It means it's easier to travel in Europe and means less money is ripped off travellers by the banks and currency exchanges.

I'm all for it ..... As long as it's only for mainland Europe ..... I want to keep my pounds sterling for myself

Answer 2

The countries are not just switching to the Euro that are joining the European Economic Community and adopting the Euro. The Euro is simply an economic vehicle to allow trade between nations. Only the strongest currencies can stand on their own like the British Pound.

If this experiment works well there may be a North and South American currency adopted in the future. With free trade the cost of converting currencies and dealing with different national banks can become to cumbersome.

Answer 3

This won't start a war......countries are buying more and more Euros while they are selling Dollars because the Euro is being adopted by all the east european countries: that means that it's value will rise for the next few years, that makes the euro a better investment than the dollar.

Answer 4

To increase trade.

Imagine if each state had a different currency. 50 different currencies, trade between two states would be horrible complex. What the exchange rate today, can I get my money exchanged for this currency, I moved, and I have to transfer my money from one state to another.

But with a single currency, you encourage trade. I don't worry about what currency I have when I go to visit my family in a different state. Same thing for those countries, I have euros, I can buy gas, food, motel rooms, and not have to worry about exchange rate, and have to pay someone to exchange from my currency to the local currency and pay again when I leave. With the euro I just pay my bill and do the things I want to do.

Answer 5

um because its worth more around 2 dollars is worth 1 euro thats why , and were on our way to a one currency world where its all the same

Answer 6

so that they are all in sync. see when traveling you had to convert your money at every border which is a pain in the *** and leaves you with a bunch of coins from a bunch of different countries. it makes much more sense this way, and will probly prevent a war.

Answer 7

The previous posters are giving answers that I think aren't directly answering your question. "Thebillthatknow's" is the closest, but the exchange rate isn't 2:1 in the USD to EUR exchange rate, the exchange rate is about 1.33:1

First, why are they switching to Euro's? The USD is the world's reserve currency, the dollar is weakening signficantly against the Euro as well as the other major world currencies. With the U.S. running such huge current, budget and trade deficits and in debt to the tune of $53 trillion (the $8 trillion you hear about is current debt, when you take into account all fed debt, it's $53 trillion), the other nations are losing faith in the strength of the U.S. economy and the dollar.

Also consider this, oil sales are denominated in U.S. dollars, thus countries hold dollars for oil purchases. As the dollar loses value, the value of the dollar reserves losses value. As the dollar declines, the price of oil with thus go up. For instance, the Middle East countries are not what I would consider "agricultural mecca's". They have to import much of their food, and they import their food from Europe. Back when the Euro was worth $0.84, if a middle east nation bought 100 million Euro in food, that was $84 million. But, not that the Euro is worth $1.33, the same 100 million Euro in food is now $133 million. Thus, as the dollar erodes, the cost of middle east nations importing food goes up, thus they must raise the price of oil.

Also, take into consideration China as another example; China has $1 trillion in forex reserves, of which $700 billion is U.S. Dollar reserves. For every penny the dollar loses in value, China loses $7 billion in value in the dollar reserves.

The US Dollar Index broke a very strong support area recently at 83.00. The 80.00 level on the USDX is the demarcation line, a break below 80 and look for the world to start wholesale dumping the dollar. With the world holding trillions in dollars and dollar denominated assets, every time the dollar drops in value, billions of dollars of value are lost in their holds. China has $700 billion in dollar reserves and $300 billion in U.S. treasuries. Japan has about $750 billion in U.S. treasuries and $680 billion in dollar reserves. Those two countries alone who over $2 trillion in dollars and dollar denominated assets.

They're switching to the Euro because the Euro is quickly becoming the one currency that can unseat the dollar as the world's reserve currency. The 2005 GDP of the Eurozone was larger than the U.S. The Eurozone is the world's largest economy. And with the Euro strengthening against the dollar, people/countries are moving out of dollars into Euro's.

Which countries? Russia, Venezuela, Switzerland, the UAE. Peter Costello, Treasurer of Australia has called for the Asian Nations to move out of dollars. China is looking at diversifying out of it dollar reserves into Euro's and gold. Iran prefers to be paid in Euro's as opposed to dollars. As a matter of fact, OPEC has been looking to denominate their oil sales in Euro's instead of dollars. The Iranian Oil Bourse, when it ultimately opens, will be trading oil in Euro's, not dollars.

The world is losing faith in the U.S. economy. The fed has to borrow $2.4 billion per day in order to function. By the way, that $53 trillion that I mentioned above isn't a number I pulled out of thin air. On Dec. 15, 2006, the treasury dept. released the report of the financial position of U.S. About a year ago, Congress mandated that the Treasury release the financials of the U.S. based on GAAP instead of cash basis. The $8 trillion you hear about is based on cash basis and is only current debt. The report, showed all debt (current, long term, unfunded liabilities, etc.) and that number is $53 trillion. Two things you must know:

1) That $53 trillion is net present value, meaning that if we wanted to pay it off, we need $53 trillion in the bank TODAY. But, it's still accruing interest and we're still borrowing.

2) The $53 trillion is ONLY federal debt. If you take into consideration all gov't debt (federal, state, local,) and corporate debt, the number is pushing upward of $80 trillion. Now, if you were a foreigner looking at the numbers; the U.S. makes about
$11-$12 trillion per year (GDP), but owes in excess of $53 trillion (just fed debt) and growing, how keen would you to invest in the U.S.? Wouldn't you be looking to move your investments out into other areas/countries that are more fiscally stable and responsible?

Answer 8

so they can all invade britain!!!