The European Union (EU) was established in 1993 and the European Central Bank (ECB) was established in 1998. Euro banknotes and coins were issued in 2002, replacing traditional currencies such as the French franc and the German mark. More than a dozen EU countries have adopted the euro as their national currency, and are termed the “eurozone.” Sharing a single currency eliminates exchange fluctuations and simplifies trade.

Eurozone firms had to make various operational changes, especially regarding finance and accounting, but generally prefer dealing in the euro. The ECB views the eurozone as one region and must apply the same monetary policy to all EU members, but this is problematic at times. The United Kingdom opted not to join the monetary union, keeping the British pound as its currency.

What types of competitive advantages and disadvantages are associated with the implementation of the euro from the perspective of the firm? What types of changes did firms make once the euro became the new currency? Was adopting the euro worth it? Why or why not?