The single currency that we have today can be seen as a logical step in complementing the Single Market. The benefits of the single currency are:
The conduct of the single monetary policy by the Eurosystem has been successful. The euro is as stable as the best-performing currencies previously used in the euro area countries. This has established an environment of price stability in the euro area, exerting a moderating influence on price and wage-setting. As a consequence, inflation expectations and inflation risk premia have been kept low and stable. Even in the more challenging current environment, price stability in the euro area has not been jeopardised.
Payments can be made with the same money in all countries of the euro area, making travelling across these countries easier. Price transparency is good for consumers since the easy comparison of price tags makes it possible for consumers to buy from the cheapest supplier in the euro area, e.g. cars in different euro area countries. Therefore, price transparency created by the single currency helps the Eurosystem to keep inflation under control. Increased competition makes it more likely that available resources will be used in the most efficient way, spurring intra-euro area trade and thereby supporting employment and growth.
The launch of the euro on 1 January 1999 eliminated foreign exchange transaction costs and thus made possible considerable savings. Within the euro area, there are no longer any costs arising from:
With the introduction of the euro, exchange rate fluctuations and therefore foreign exchange risks within the euro area have also disappeared. In the past, these exchange rate costs and risks hindered trade and competition across borders.
EI.007 01/13European Central Bank