International economics Essay Example | Topics and Well Written Essays - 250 words

International economics - Essay Example The main advantage of this system was the elimination of the costs of converting currencies and exchange rates uncertainties. This system also brought with it increased transparency, efficiency, and inward investment. Among the disadvantages was the one size fits all policy. When one country was doing badly and the rest were booming economically, the central bank might be interested in increasing the interest rates, this would make the situation worse for the country experiencing a recession. Also some countries may be reluctant to improve their economy with the hope that countries doing well would bail them out. Portugal, Greece and Spain have been the poor performers of the Eurozone. These countries have shown the disadvantages of having a fixed currency regime. Ever since these nations adopted the Euro, they have been unable to implement the required measures for independent monetary policy in order to mitigate the effects of an economic downfall in the Eurozone. European Union leaders have been giving stabilization packages to bail out these countries and maintain stability in the Eurozone but these countries are still lagging behind. Despite the many advantages a fixed currency regime has to offer, Portugal Greece and Spain prove