Euro is a single currency, the introduction of which was provided for by the Maastricht Treaty on the establishment of the European Union as a single economic zone. The introduction of the euro is due to various reasons, some of which are economic, others are political.
Region consolidation
One of the main reasons for introducing the euro was the consolidation of the entire European region. If you look at the world economy from the point of view of its centers, you can see that it is North America (USA and Canada), the Far East (Japan, China and several other countries) and Western Europe (European Union). The presence of a single currency is a very powerful tool for combining the country's industrial capacities; it is also a lever in the competition with other economic regions.
Transaction costs
With the introduction of the European Union, it was decided to remove most of the barriers to the free economic development of Europe as a region. The European Union should mean freedom of movement of people, goods and capital, which would be impossible if there were constant transfers from one currency to another. In addition, transactions would inevitably be carried out with losses, which would lead to a slowdown in the economic development of all countries of Western Europe.
Elimination of market segmentation
Many goods in European countries before the introduction of the euro zone varied greatly in value. This was especially noticeable on the example of some food products, alcohol and tobacco products and banking services. With the introduction of the euro zone, prices, although not completely, but nevertheless quite leveled off, as national currencies no longer serve as an obstacle to the free movement of goods between countries. Additionally, now there are no barriers to entry to the market for many enterprises: a single euro zone has removed this barrier.
The fight against inflation
In the recent past, there were 11 central banks in Europe that jointly fought inflation, despite the fact that everyone had their own interests. Now there is the Central Bank, which pursues a single policy. The introduction of the euro not only simplified the banking system and made the financial situation more reliable, but also reduced the need for European countries in foreign exchange reserves.
