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Currency competition in the Eurozone: an answer to the crisis

Author

Listed:
  • Krzysztof Spirzewski

    (University of Warsaw WNE)

Abstract

The common currency was created as a result of theoreti cal considerati ons regarding the functi oning of opti mum currency areas. This theory refers to a number of benefi ts as well as costs. It imposes a number of requirements that are necessary for the newly created structure to be considered opti mum. The economies of Eurozone countries did not meet these requirements. In consequence, the present functi oning of the Eurozone encounters many disturbances – the strong diff erenti ati on of the balance of payments is a signifi cant example. The reforms initi ated in the European Union and undertaken in response to the financial crisis encompassed the Eurozone countries, yet they only concern fi nancial policy. The adopted strategy of acti on arouses questi ons as to its effectiveness. The aim of this article is to present one of the reasons for the Eurozone crisis and a proposal for changing the monetary policy, in parti cular the exchange rate. In view of this objecti ve, the main hypothesis reads as follows: one of the methods of counteracti ng the crisis is to introduce currency competi ti on within the Eurozone.

Suggested Citation

  • Krzysztof Spirzewski, 2016. "Currency competition in the Eurozone: an answer to the crisis," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 12(1), pages 12-20, June.
    • Handle: RePEc:rze:efinan:v:12:y:2016:i:1:p:12-20
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G01 - Financial Economics - - General - - - Financial Crises

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