What Do You Mean By Monetary Agreement

The path of economic integration, of which the European monetary agreement was only a small part, was initiated because of a number of political motivations and historical opinions. [14] Decisions and policies implemented before and during the EMA have given rise to a debate on whether they are based on political or economic objectives. [10] The idea of a common institutional framework required cooperation between the different economic policies and political policies of member governments. [12] This meant that the political rivalry between European countries was reduced to achieve mutual economic cooperation which also led to enhanced political integration. [11] [14] A monetary union can have negative effects on participating economies. In the case of the euro, some economists have expressed doubts about the EU`s ability to be considered an `optimal monetary zone`. Economic diversity and the inflexibility of labour markets have been seen as the main obstacles for EU Member States to take full advantage of the benefits of monetary union. Monetary integration has made some economies particularly vulnerable to asymmetric (external) shocks, with national policymakers no longer having control over nominal interest rates. (See also the eurozone debt crisis. Our editors will check what you have submitted and decide if they want to revise the article. The IMF`s objective was to monitor exchange rates and identify countries in need of global financial support. The World Bank, originally called the International Bank for Reconstruction and Development, was created to manage the funds available for aid to countries that had been physically and financially devastated by world War II. In the 21st century, the IMF has 189 member countries and continues to support global monetary cooperation.

At the same time, the World Bank is helping to promote these efforts through its loans and grants to governments. Strengthening the integration of the EMA has also resulted in a loss of autonomy and national sovereignty for member governments and their nations. [12] Individual governments within the EMA were required to abandon their autonomous use of certain policies, including fiscal and monetary policy. [14] This element of political integration was necessary for the EMA to achieve unity on exchange and trade policies in Europe. [5] The views of economic and political actors, as well as events such as the fall of the Berlin Wall and the resumption of war in Germany, have satisfied Europeans with the idea of economic integration in Europe. [7] European countries were motivated by the prospect of an economic recovery after the war. [9] This has led to stability and a high degree of policy coordination in the member states of Europe. [11] [12] There have been concerns about the political nature of this integration, and agreements such as the EMA have highlighted the acceleration of globalization and economic growth that have been achieved. [15] Although after the economic and political integration implemented within the EMA, some countries preferred a system of pure economic integration. [11] In the 1950s, after the creation of the EMA, these countries, including Denmark, the United Kingdom, Sweden, Finland and Austria, decided to create their own free trade zones. [14] These free trade zones have not focused on political integration, but only on achieving countries` economic objectives and policies.

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