What is a monetary union? To what extent has the European Union achieved it? What are some of the difficulties the EU monetary union faces today? How do you think it might address these difficulties?

Question

What will be an ideal response?

Answer 1

The ideal answer should include:
1. Define a monetary union.
2. Explain the extent to which the EU is a monetary union. For example, the EU has adopted a common currency and the European Central Bank has taken over the functions of states' central banks. Yet, not all members of the EU are members of the monetary union.
3. Discuss some of the difficulties of the EU monetary union. For instance, students might discuss economic and political problems such as the variation in economic and financial conditions across members of the European monetary union or that the EU does not have the power to control taxation or national budgets of member states.
4. Discuss how these problems might be overcome. For example, one solution is to work toward equalizing Europe's economies. To reduce the disparity between rich and poor EU states, the Maastricht Treaty increased the EU budget by $25 billion annually to provide economic assistance to the poorer members.
5. Offer a concise summary and effective conclusion.