Date of Award

2016

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Coe, Richard

Area of Concentration

Economics

Abstract

The Euro was implemented by eleven nations in 1999 to promote trade among European countries. After heated debate, the United Kingdom decided not to join the Eurozone and has yet to give up their independent currency. Yet the question remains: should the United Kingdom adopt the Euro as their national currency? To answer this question, this thesis examined established Optimum Currency Area theory to evaluate optimality criteria for functionality of the Eurozone and possible benefits from British membership. Additionally, recent historical events and their implications were used to augment the conclusion. Results show that although the Eurozone meets several OCA criteria, it still lacks characteristics to be considered fully optimal. The UK meets even fewer optimality criteria. Thus, this study determined that is not beneficial for the United Kingdom to join the Eurozone at this time. Additionally, recent historical events, such as the sovereign debt crisis experienced by some Euro-using nations highlight the risk of giving up independent monetary policy. Loss of monetary control likely caused Greece continued economic problems. By contrast, nations such as Iceland and India were able to avert further crisis through independent monetary policy.

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