Unit 8: Economic and Monetary Union in Europe
This unit investigates the European Union and the Eurozone as some of the largest global economic and financial centers and the implications for international capital markets. Specifically, in this unit, you will review opportunities and challenges that the EU is currently facing, such as creating a common financial market and the effects of Brexit.
Completing this unit should take you approximately 4 hours.
Upon successful completion of this unit, you will be able to:
- explain the membership criteria of the EU and of its common currency, the Euro;
- explain the major benefits of EU membership from a financial and economic perspective;
- predict the effect of Brexit on the UK's and EU's financial markets; and
- identify the benefits and challenges of Europe as an economic center.
8.1: The European Union
Members of the European Union may not necessarily be the same as the Eurozone member states. What are the economic and financial benefits of being part of the EU?
While going through this reference, focus on the EU. It will provide you with a historical perspective of the EU and a future outlook of the EU as a trading bloc. In addition, it will be beneficial to read about other trade agreements as it will provide you with more details on the different forms of economic integration. Which is more beneficial for states, lax economic integrations or more comprehensive ones?
This article explains the different governing institutions of the European Union. What is the difference between the EU and the Eurozone?
For states wishing to join the European Union (EU), there are some conditions they are required to meet. Upon meeting these conditions, prospective member states will be able to benefit from a range of economic and financial benefits, among other benefits. Here you will learn more about the conditions of joining the EU. Is being in the EU financially and economically beneficial?
8.2: The Eurozone
This page elaborates on the monetary union in the EU and compares it to that of the US. Monetary unions have an effect on monetary policies. What are these effects?
This reference lists some of the benefits of adopting a single European currency. Remember that the Eurozone and the European Union (EU) are different, as are their membership criteria. The eurozone refers to states that use the single currency (Euro). In contrast, the European Union is the political, financial, and economic integration of member states that may not necessarily use the Euro as their currency. The European Economic Area, on the other hand, is an economic integration of its member states who may not be members of the EU or use a single currency. Which one of these forms of integration do you think would be more beneficial for a given state?
Like any other union, for states to be able to use the Euro as their currency, there are some prerequisites these states need to meet, and states are evaluated as to whether their membership will cause economic risks for the state or the euro bloc.
Knowing the cause of the Eurozone debt crisis will help you understand the economic and financial challenges that the Eurozone faces. This resource explores the role of the single currency in crises. Do you think a monetary union is financially advantageous?
As a result of Brexit, the UK is expected to lose many of its privileges of being part of the EU. One of those is financial privileges that include passporting (which is a system that enables banks and financial services providers authorized in any EU or EEA state to trade freely in other EU or EEA member states with minimal additional authorization). It will have an effect on UK-based financial services. How would Brexit affect the financial services in the UK?
Reading this will help you gain an in-depth understanding of how and why Brexit happened. It also outlines the perceived economic and financial effects of Brexit. How do you think Brexit affected international finance?
Joining the EU is said to provide member states with a list of advantages. These will include membership at the different European financial institutions. Generally, there are several European Financial Institutions. The European Central Bank (ECB) maintains the Euro's purchasing power and price stability. The European Investment Bank (EIB) raises funds for capital projects to the EU's objectives. The European Investment Fund (EIF) handles venture capital and serves as the guarantee agency of the EU. Reading this reference will help you understand some of the benefits of joining the EU. How would member states be affected if they decided to leave the union?
8.3: Europe as a Financial Market
The European Financial Sector has experienced many challenges, like the Eurozone Sovereign Debt Crisis and, most recently, Brexit. Here, you will learn more about the challenges of the European capital markets. What are some of the financial challenges the EU faced upon the UK's departure?
One of the advantages of being in the European single market is joining a single banking union. This means there will be a Single Resolution Mechanism and a Single Supervisory Mechanism. You will learn more about the European Banking Union and its elements here. How do you think the single banking union could help prevent a spillover effect of a crisis in member states?
Unit 8 Study Resources
This review video is an excellent way to review what you've learned so far and is presented by one of the professors who created the course.
Watch this as you work through the unit and prepare to take the final exam.
We also recommend that you review this Study Guide before taking the Unit 8 Assessment.
Unit 8 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.