A stronger dollar
A stronger dollar creates a scenario whereby it can be traded for a larger amount of foreign currency. The ripple effect is that it’s beneficial to travellers because they exchange the dollar for a larger amount of the foreign currency while on the other hand it discourages exports.
A monetary system is a conglomeration of rules, policies and institutions that the government use to provide and control money in the economy. Some of the countries that have a strong monetary system are the United States, England, and Germany amongst others whereas those with a weak monetary system are Zimbabwe, Uganda, and Tanzania amongst others. For example the price of a paper roll in the US is 1.34 US Dollars but when the paper roll is bought in Zimbabwe it costs 484.946 ZWD. This clearly shows that the US Dollar stronger than the Zimbabwean Dollar.
The European Commission is a body of the European Union that comes up with the rules, implements decisions and makes sure that the union’s treaties are adhered to. The Commission has responsibilities such as to come up with medium-term strategies, draft legislation and preside over the legislative process. It also represents the EU in trade negotiations, make rules for example in cases where competition between the member countries is inevitable, makes the budget of the EU and to look into the implementation of the treaties and legislation. Having one monetary system works well for Europe because it makes trade easy between the member states since they have a level playing platform for trade.
A stronger dollar makes reduces exports of goods from the US due to the unwillingness of buyers in the other countries. This is majorly because the other countries will be using lots of their currency to import that good from the US. If I am a purchasing agent for a nation say Nigeria and I want to import a good say Ford cars from the US, I will prefer getting the goods in bulk so as their price of purchasing goes down or even wait for the dollar to weaken first then purchase the good at a lower value.
It has been confirmed that having a common monetary system encourages trade by providing a level playing ground for the member countries in trade and because of this I think the NAFTA will move to a common monetary system.
- European Commission (2006). How the European Union works: Your guide to the EU institutions
- Peterson, John and Michael Shackelton (2006) “Institutions of European Union”
- Paul van Buitenen (2000). Blowing the Whistle: Fraud in the European Commission. Politicos Pub. ISBN 9781902301464.