# Euroization

- Canonical URL: https://www.gerhardmerk.de/euroization
- Post ID: 594518
- Modified: 2023-07-25T21:01:25+00:00
- Language: en

## Definition

The adoption of the EUR as a currency unit by a country that is not part of the European Monetary Union. - Advantages are - the adoption of a stable currency, - lower interest rates; because the larger a currency area, the lower CETERIS PARIBUS the interest rates will be, - no exchange rate risk and - no risk of speculative attacks on the currency. - The disadvantage is that - the respective state has no vote in the ECB Governing Council and - forgoes central bank profits (seigniorage; seigniorage). - Economic entities outside the euro zone do not use the domestic currency for payment and investment purposes, but the EUR. Euroization in this sense is always a sign that economic agents do not trust their own currency. Only reliable governance and a central bank policy strictly geared to preserving the currency's massta properties are capable of halting or reversing euroization. Even very high threats of punishment do not bring about a return to the domestic currency in the absence of these preconditions.- See accession, unilateral, dollarization, secondary currency, parallel currency. - Cf. ECB Monthly Report of April 2006, pp. 97 ff. (in-depth presentation; p. 108: overview), Deutsche Bundesbank Monthly Report of December 2008, pp. 31 ff. (advantages and disadvantages of EMU for Germany). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

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