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    Quiz, IF, 022 & 120, BBA 8

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    The document discusses the prospect of the United Kingdom joining the euro currency club. If it were to join, it would propel the euro to rival the US dollar as a global currency. However, the UK would lose monetary sovereignty and control over economic policy. Currently, the UK government is opposed to adopting the euro due to concerns over losing independence and the EU's economic challenges. Public opinion in the UK is also divided on the issue. A key consideration is whether the potential benefits of joining, such as political union and market development, outweigh the costs such as losing control over fiscal policy.

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    Quiz, IF, 022 & 120, BBA 8

    Uploaded by

    Lora
    31 views4 pages
    The document discusses the prospect of the United Kingdom joining the euro currency club. If it were to join, it would propel the euro to rival the US dollar as a global currency. However, the UK would lose monetary sovereignty and control over economic policy. Currently, the UK government is opposed to adopting the euro due to concerns over losing independence and the EU's economic challenges. Public opinion in the UK is also divided on the issue. A key consideration is whether the potential benefits of joining, such as political union and market development, outweigh the costs such as losing control over fiscal policy.

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    Quiz, IF,022 & 120, BBA 8

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    The document discusses the prospect of the United Kingdom joining the euro currency club. If it were to join, it would propel the euro to rival the US dollar as a global currency. However, the UK would lose monetary sovereignty and control over economic policy. Currently, the UK government is opposed to adopting the euro due to concerns over losing independence and the EU's economic challenges. Public opinion in the UK is also divided on the issue. A key consideration is whether the potential benefits of joining, such as political union and market development, outweigh the costs such as losing control over fiscal policy.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    31 views4 pages

    Quiz, IF, 022 & 120, BBA 8

    Uploaded by

    Lora
    The document discusses the prospect of the United Kingdom joining the euro currency club. If it were to join, it would propel the euro to rival the US dollar as a global currency. However, the UK would lose monetary sovereignty and control over economic policy. Currently, the UK government is opposed to adopting the euro due to concerns over losing independence and the EU's economic challenges. Public opinion in the UK is also divided on the issue. A key consideration is whether the potential benefits of joining, such as political union and market development, outweigh the costs such as losing control over fiscal policy.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 4

    INTERNATIONAL FINANCE

    Quiz # 1

    Submitted to:
    Ma’am FARAH ISHTIAQ

    Submitted by:
    UMER SAEED KHAN
    Fa-17/BBA/022

    ZEESHAN ASIF
    Fa-17/BBA/120

    Dated: April 7th, 2021

    LAHORE GARRISON UNIVERSITY


    MINI CASES

    Will the United Kingdom Join the Euro Club?

    When the euro was introduced in January 1999, the United Kingdom was conspicuously absent
    from the list of European countries adopting the common currency. Although the previous
    Labour government led by Prime Minister Tony Blair appeared to be in favor of joining the euro
    club, the current Tory goverment is not in favor of adopting the euro and thus giving up
    monetary sovereignty of the country. Public opinion is also divided on the issue.

    Whether the United Kingdom will eventually join the euro club is a matter of considerable
    importance for the future of the European Union as well as that of the United Kingdom. If the
    United Kingdom, with its sophisticated finance industry, joins, it will most certainly propel the
    euro into a global currency status rivaling the U.S. dollar. The United Kingdom for its part will
    firmly join the process of economic and political unionization of Europe, abandoning its
    traditional balancing role.

    Investigate the political, economic, and historical situations surrounding British participation in
    the European economic and monetary integration and write your own assessment of the prospect
    of Britain joining the euro club. In doing so, assess from the British perspective, among other
    things, (1) potential benefits and costs of adopting the euro, (2) economic and political
    constraints facing the country, and (3) the potential impact of British adoption of the euro on the
    international financial system, including the role of the U.S. dollar.

    Answer: If the UK joins the Euro Club, the potential benefits it would possess will be in the
    shape of Political union of the member states, it would help to the development of the capital
    market and the transaction cost will be reduced, moreover, the exchange rate uncertainty will be
    diminished. While on the other hand, UK will lose its control or independence over its economic
    policy and the fiscal policy.

    UK had a considerably stable control over its economy while the EU had faced many challenges
    regarding the Euro. Europe didn’t have a national treasury and the member countries (like
    Greece, Portugal, Belgium) were not seem to be stable and were facing challenges. So, in this
    regard, the UK was performing quite well and was not interested in joining the EC, and the
    British public was also not in favor of adopting Euro and kept Pound as its currency.
    MEXICO’S BOP PROBLEM

    Mexico experienced large-scale trade deficits, depletion of foreign reserve holdings, and a major
    currency devaluation in December 1994, followed by the decision to freely float the peso. These
    events also brought about a severe recession and higher unemployment in Mexico. Since the
    devaluation, however, the trade balance has improved.

    Investigate the Mexican experiences in detail and write a report on the subject. In the report, you
    may:

    1. Document the trend in Mexico’s key economic indicators, such as the balance of payments,
    the exchange rate, and foreign reserve holdings, during the period 1994.1 through 1995.12.

    2. Investigate the causes of Mexico’s balance-of-payments difficulties prior to the peso


    devaluation.

    3. Discuss what policy actions might have prevented or mitigated the balance-of payments
    problem and the subsequent collapse of the peso.

    4. Derive lessons from the Mexican experience that may be useful for other developing
    countries.

    In your report, you may identify and address any other relevant issues concerning Mexico’s
    balance-of-payments problem. International Financial Statistics published by IMF provides basic
    macroeconomic data on Mexico.

    Answer: Mexico was keen to achieve sustainable economic growth but in the year 1994 it had
    faced current account deficit which led to the foreign exchange crisis. The unemployment rate
    was high because of unrestricted fluctuating exchange rate of peso and economic info was not
    provided to investors. BoP problem can be prevented by the preclusions or safeguard the fiscal
    system the peso devaluation. There should be political constancy and should focus on the import
    and export and peso currency balance of payment should be handled correctly.

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