Euro Zone

(noun)

The eurozone is an economic and monetary union of 17 European Union (EU) member states that have adopted the euro (€) as their common currency and sole legal tender. The eurozone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Related Terms

Examples of Euro Zone in the following topics:

  • The European Union (EU)

    • Since then, the eurozone (or Euro Zone) encompasses 17 countries.
    • The euro is designed to help build a single market by easing travel of citizens and goods; eliminating exchange rate problems; providing price transparency; creating a single financial market, price stability, and low interest rates; and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone.
    • Adopted in 2002, the euro promotes a single market within 17 countries of the EU.

  • Move to the Euro

  • The European Central Bank

    • Seventeen EU members use the common currency, the euro that we refer to as the Eurozone.
    • Consequently, the zone helps integrate European countries, spurring economic growth and unleashing the competitive market forces.
    • Euro is successful while the Eurozone rivals the United States in terms of GDP.
    • Euro did well until the 2008 Financial Crisis struck the world's economy.
    • Euro began losing ground against the U.S. dollar.

  • Answers to Chapter 16 Questions

    • We calculated: $\left( \frac{2\text{ km}}{\euro 1} \right)\left( \frac{\euro 0.714}{\ 1} \right)=1.428 \frac{\text{km}}{\ 1}$
    • $\left( \frac{2\text{ km}}{\euro 1} \right)\left( \frac{\euro 1}{\text{kuna }100} \right)=1 \frac{\text{km}}{\text{kuna }50}$
    • Step 1: Trader converts the convertible markets into euros, calculated below:
    • Step 2: Trader converts the euros into Croatian kunas, shown below:
    • It can trade euros for U.S. dollars, causing the U.S. dollar to appreciate and the euro to depreciate.

  • Exchange Rate Risk

    • For example, one U.S. dollar equals 1.5 euros.
    • Now multiply the ratios by 1,500 euros.
    • Ratio for Equation 4 is wrong because the euro currency units become squared.
    • If the U.S. dollar appreciated, then the euro automatically depreciated.
    • Thus, the U.S. dollar depreciated while the euro appreciated.

  • Quantity Theory of Money

    • Thus, the exchange rate equals U.S. dollars per euro.
    • $\dot{s}=\left ( \dot{m}_{\text{U.S.}}^{ S} -\dot{m}_{\text{euro}}^{S} \right )+\left ( \dot{v}_{\text{U.S.}} -\ dot{v}_{\text{euro}} \right )+\left ( \dot{y}_{\text{euro}} -\dot{y}_{\text{U.S.}} \ right )$
    • If the velocities for money do not change (i.e. equal zero), subsequently, the euro should appreciate by 2% against the U.S. dollar.
    • Consequently, the higher real income and a slower expanding money supply strengthen the euro.

  • Types of Root Systems and Zones of Growth

    • The root tip has three main zones: a zone of cell division, a zone of elongation, and a zone of maturation.
    • The root tip can be divided into three zones: a zone of cell division, a zone of elongation, and a zone of maturation .
    • All three zones are in approximately the first centimeter of the root tip.
    • A longitudinal view of the root reveals the zones of cell division, elongation, and maturation.
    • Describe the three zones of the root tip and summarize the role of each zone in root growth

  • A Random Walk

    • For example, if the U.S. dollar-euro exchange rate equals $1.3 per euro today, then we expect the exchange rate to be $1.3 per euro tomorrow plus a random fluctuation.
    • We show the monthly U.S. dollar-euro exchange rate in Figure 1.
    • We show the first difference for the U.S dollar-euro exchange rate in Figure 2.
    • Moreover, statistical tests indicate the U.S. dollar-euro exchange rate is almost a random walk. ( The U.S. dollar-euro exchange rate has the structure, $s_t=p_1s_{t-1}+p_2s_{t-2}+e_t$, where $p_1$ is close to one while $p_2$ has a significant second lag.
    • First difference of the U.S. dollar per euro exchange rate

  • Chapter Questions

    • An investor buys a currency futures contract for $1 = 1.5 euros from a bank for 150,000 euros.
    • Who pays and how much into a margin account if the exchange rate changes to $1 = 1 euro?
    • Swap's face values are $100 million and 110 million euros with a coupon interest of 3% for U.S. dollars and 4% for the euros.
    • Current discount rates are 5% APR for the U.S. and 6% APR in Europe while the current spot exchange is St = $1.2 / euro.

  • Answers to Chapter 18 Questions

    • Value of the contract on the spot market equals $150,000\text{ euro}\frac{\ 1}{1\text{ euro}}=\ 150,000$ .
    • Value of the futures contract is $150,000\text{ euro}\frac{\ 1}{1.5\text{ euro}}=\ 100,000$.
    • Coupon payments are $1.5 million and 2.2 million euros respectively.
    • Implicit exchange rate is $1.5 million ÷ 2.2 million euros, which equals $0.682 per euro.
    • $\text{Swap Value}=107.9\text{ million } \euro \cdot \frac{\ 2.20}{1 \euro}-\ 98.1\text{ million}=\ 31.4\text{ million}$