Why have a group of European countries adopted a single currency?

Question

Why have a group of European countries adopted a single currency?

Answer 1

International trading by the participants is facilitated by the one currency. The concerns over currency values, inflation and deflation is eased by the agreement of the participants to follow a similar economic, fiscal and monetary policy.

Another significant concern at the time was the uncertain status of the worlds only reserve currency-- the US dollar. The dollar has been regularly over produced to satisfy America budget and trade deficits. Subsequently, the dollar continues to lose value in the marketplace through a process called inflation. Every nation, company or individual who has dollars in a savings account has seen the value of those savings decrease as a result of the overproduction of dollars. I think the Europeans realized this and established the Euro to effectively compete with the vacillating dollar.

Answer 2

A single currency facilitates trade by lowering transactions costs and eliminating price
changes due to currency fluctuations. Additionally, it requires that all countries in the
European Union follow an identical monetary policy, reducing inflation uncertainties.

Answer 3

It gives the Europeans more global economic clout to have one common currency, and is more efficient.

Answer 4

Of course it also makes them a stronger economic and political force.

Shhhh, they may have anticipated the fall of the US political economy.