Merged currency is a common currency used between one or more nations of the world. For example, in European countries, people don’t worry about any exchange rates because they know that the value of the euro will be the same in all the member states of the European Union. The advantage of a merged currency is that it eliminates the exchange risk. European Union member states can buy goods from other member nations without any risk or extra charges of exchange. For example, all the nations who have adopted the euro, like Germany, France, etc, will exchange currency so much easier than with any different currency.

However, the merged currency has problems too. Following a merge, currency means the nation has given up on the domestic monetary policy. The main issue created by merge currency is that several nations don’t necessarily are willing to follow a certain policy created by an institution. It also needs to concentrate on what the nation on its individual basis needs to formulate policies for themselves. Let’s take the example of Portugal that there will be times when the European Central bank does not decide according to the decisions of Portugal. There can be a mismatch which shows that there could be a notable ignorance towards the right to say of nations.

Leave a Reply

X
%d bloggers like this: