Euro and US Dollar Common Currency Issue
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Transcript of Euro and US Dollar Common Currency Issue
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Euro and US Dollar Common
currency Issue
Efforts By :-Hitesh Jain (FM/11/013)
Dulichand pawecha (FM/11/018)
Bhavya Mishra (FM/11/016)1PGD-FM SEM -2 (HITESH, DULICHAND,
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Us dollar history
English Thaler;
The ScandinaviaDaler;
The United StatesDollar.
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Main periods of the United States
Dollar
1. Coinage period
bimetallism
From 1792 to 1873
dollar was freelybacked by both gold
and silver at a ratio of
15:1
Therefore, in 1834, the15:1 ratio was
changed to a 16:1
ratio.3PGD-FM SEM -2 (HITESH, DULICHAND,
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Did You Know
That the $500, $1000, $5000 and $10,000 billshave not been printed since 1946?
That it costs only 4.1 cents to make a $1 bill. Itcosts the same thing to make a $100 bill?
That if we laid each current U.S. bill printedside by side they would stretch around theearth's equator about 24 times?
That to have your picture on a bill, you mustbe known for something you have done forUSA and you must be deceased? =D
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Euro history
History of Euro - the Euro currency was
launched or introduced as an accounting
currency on January 1, 1999. The history of
Euro started with the acceptance of theMaastricht Treaty.
The history of Euro begun with participating
countries fixing their domestic currencies tothe Euro.
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Cont.
This event in the history of Euro meant that
local currencies were not allowed to fluctuate
against the Euro and against each other. When
the history of Euro was started, Euro waslaunched merely as an electronic currency.
Euro as a cash currency did not become a legal
tender until later, on January 1, 2002.
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Cont.
The roots of the euro currency originated in
the European Monetary System in 1979 whichinvolved creation of the European CurrencyUnit. Per history of Euro, originally twelve (12)
of the 15 EU countries (Germany, France,Austria, Spain, Portugal, Italy, Belgium,Luxembourg, the Netherlands, Finland, Greeceand Ireland) were members of the so-called
Eurozone. Euro history tells us that thesestates were joined later by Slovenia (2007),Cyprus (2008), Malta (2008), and Slovakia(2009).
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Benefits in the history of Euro
The Euro was implemented with the goal ofcreating a more stable European economy.Looking at the history of euro, we can see thatthe Euro improved economic growth across
Europe and offered more integration amongfinancial markets. The euro history also showsthat the Euro currency strengthened Europeanpresence in the global economy through being a
reserve currency. The history of euro also provesthat the Euro helped ease exchange rate volatilityamong different European nations
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Euro history problems
The history of euro has brought also a numberof problems. While the euro improvedstability of the region, all nations have to haverelatively similar interest rate to avoid interestrate arbitrage. This has created problems forsome economies in the euro history, such asGermany. The Euro has taken away the
interest rate as a tool of the fiscal policy. If thelocal economy slows, the local governmentcannot lower interest rates to stimulategrowth.
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Countries use the US Dollar
1. East Timor
2. British Indian Ocean Territory
3. British Virgin Islands4. East Timor
5. Ecuador
6. El Salvador
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Cont.
7. Marshall Islands
8. Northern Mariana Islands
9. Palau10.Panama
11.Turks and Caicos Islands
12.United States
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Euro Countries
23 Countries Use the Euro as their OfficialCurrency
1) Andorra2) Austria
3) Belgium4) Cyprus5) Estonia6) Finland7) France
8) Germany9) Greece10) Ireland
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Cont.11) Italy
12) Kosovo13) Luxembourg14) Malta15) Monaco
16) Montenegro17) Netherlands18) Portugal19) San Marino20) Slovakia
21) Slovenia22) Spain23) Vatican City
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Common currency issue
1957 The Treaty of Rome was signed,creating the European Atomic EnergyCommunity (EURATOM) and the European
Economic Community (EEC). The objective ofthe Member States was to remove trade andtariff barriers between them and to form acommon market.
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Cont.
1979 The governments and central banks of
the nine Member States (Belgium, Denmark,
France, Ireland, Italy, Luxembourg, the
Netherlands, the United Kingdom, WestGermany) created the European Monetary
System (EMS) which had the main goal to
create a common currency.
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Cont.
1988 The European Council, that is the
Heads of State and Governments, confirmed
the objective of realising Economic and
Monetary Union (EMU). A committee ofexperts, chaired by the then President of the
European Commission, Jacques Delors,
examined ways of achieving EMU. Its report(the Delors Report) proposed a transition in
three stages.
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Cont.
1992 Representatives of twelve European
Union (EU) Member States signed the Treaty
on European Union (Maastricht Treaty) that
provided for the establishment of a single EUcurrency and the founding of the European
Central Bank
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Dollar vs. Euro
Not long after the introduction of the euro asa cash currency in 2002, the dollar began todepreciate steadily in value. As U.S. trade and
budget deficits continued to increase, theeuro started rising in value.
By December 2004, the dollar had fallen tonew lows against all major currencies; theeuro rose above $1.36/ (under 0.74/$) forthe first time, in contrast to previous lows inearly 2003 (0.87/$).
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Cont.
In the first quarter of 2004 the U.S. dollar, with
the advantage of Federal Reserve's policy of
raising the interest rates, regained some
standing against all major currencies, climbingfrom 0.78/$ to 0.84/$. However, all gains
were lost in the second half of 2004, and the
dollar stood at 0.74/$ at the end of 2004.
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Cont.
Since 2002, the only year in which the dollar
actually recovered against the euro was 2005.
Although some analysts previewed the dollar
dropping as far as $1.60/ (0.63/$), itfinished 2005 with an increase against the
euro, climbing to 0.83/$.
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