European Monetary Union and its Impact on the Global FX Market

European Monetary Union 1
EUROPEAN MONETARY UNION
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European Monetary Union 2
Table of Contents
Introduction......................................................................................................................................3
The European monetary union Market............................................................................................3
Global FX Market............................................................................................................................4
Economic Monetary Union and the Global FX markets.................................................................4
The future of EMU and FX market.................................................................................................5
Conclusion.......................................................................................................................................5
Bibliography....................................................................................................................................6

European Monetary Union 3
Introduction
Globalization of the market is the process through which countries trade in a synergy.
The sale of products is done interdependently and integrated into the global economy.
Globalization makes the world a small village and investors from all corners of the globe can
communicate easily. The communication leads to better awareness of the market and
opportunities that are available. A monetary union involves two or more states making an
agreement to use a single currency. The union ensures that trade is facilitated by breaking
currency exchange barriers and promoting transparency. Most monetary unions occur between
states in the same geographical locations but globalization has made monetary union more
possible. The essay will cover the European monetary union and how it has impacted on the
global FX market.
The European monetary union Market
In a bid to develop an integrated market system, the EU developed the Economic
monetary union (EMU) through the Maastricht treaty 1992 whose sole purpose was the creation
of the single economic and monetary union. The EMU is open to 28 countries in the European
Union but has 19 member states with 17 of them have adopted the single currency the newest
adoptee being Croatia (Breuss, 2015). The zone covering the monetary union is commonly
referred to as the eurozone with 19-member states. The market is a result of the expansion of the
EU single market and the main features include unregulated movement of goods, capital,
services and labour as well as common regulations on products. The market adopted a single
currency the euro and single monetary policy with the European Central Bank (ECB) setting the
policy (Valdez, 2015). The ECB is complemented by fiscally harmonized and coordinated