Economic and Monetary Union[12]
55. The Committee sought evidence of the impact
of Economic and Monetary Union (EMU) and the adoption of the euro
in 13 of the Member States on the functioning of the Single Market.
The Commission pointed to the benefits of increased transparency
and reduction in the cost of cross-border activities as a result
of the single currency. The Government conceded that the single
currency could play a role in strengthening transparency, and
that the elimination of exchange rate risk and transaction costs
under EMU facilitated the provision of cross-border financial
services (p 145). The benefit of transparency was supported
by BEUC, the European consumers' organisation, but it was also
pointed out that transparency needs to be accompanied by very
concrete measures to make it beneficial to consumers; the euro
in itself cannot deal with the lack of competition, or the difficulties
in cross-border shopping, or with uncertainties about the rights
and means of redress for consumers (Q 219).
56. Another impact suggested by witnesses was
an increase in foreign direct investment. The Centre for European
Policy Studies (CEPS) argued that the introduction of the single
currency has been one of the major factors in increasing the attractiveness
of the European financial market (p 207). Mr Sutherland
argued that inward investment to the UK would have been higher
if the UK was part of the eurozone (Q 319). Lord Williamson
of Horton made the point that currency variations in the Single
Market can present difficulties (Q 7), but he conceded that
there did not appear to be a problem for businesses crossing over
from the eurozone to the sterling zone (Q 13).
57. Dr Thatcher told us that a single currency
may help the functioning of the Single Market, but it is not a
necessary or sufficient condition for its success (Q 46).
He argued that the lack of common standards was a more important
barrier than the lack of a common currency.
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