 Welcome back everyone. So for today, we're gonna look at monetary unions and economic unions and we'll see how they work, what are their benefits and perhaps what kind of things, what kind of positive things they could bring to a particular country and to the economy. So for us today, what we're gonna look into, we're going to look at a specific example, a case study, we'll look at the EU and how the monetary union and the EU and how basically the European Union was able to implement a single market strategy and at the same time have a single currency. To do that, we'll first look at the membership criteria for the EU's common currency. Then we'll look at the financial and economic benefits of the membership to the EU. After this, we'll look at Brexit and what kind of side effects or what kind of negative impacts Brexit has on the UK and the EU's financial markets and then we'll look at some of the benefits and challenges that the EU may experience as an economic center. First things first, if we'd like to discuss the European Union and the Eurozone, these are two separate yet connected things together. The Eurozone is basically the combination of countries that are members of the EU, so members of the European Union, but the difference here is that these member states have opted for the single currency, so these member states that are member to the European Union have the single currency as their own national currency, so they have the Euro as their own currency. Now, for countries, for member states to opt for using the single currency or to use the Euro, what they need to do, they have to meet specific criteria. One of these criteria is basically looking at their inflation rate, as their inflation rate shouldn't be higher than 1.5%, as compared to the three best performing countries within the EU. Similarly, if we're looking at the interest rate, their interest rate also should not be higher than 2%, compared to three of the best performing countries in the EU. Now, other than those two main criterias, also they should not be under any excessive type of defensive procedure and they should also participate in something that is referred to as the exchange rate mechanism in the EU for at least two years. So here this is going to be a transitional period during these two years to see how the country is able to apply all the regulations, all the monetary policies of the EU, how they are able to apply these properly and ensure that the transition from using their own currency into using the single currency is as smooth as possible. Now, on the other hand, as we said, the EU or the European Union is basically the political union that combines or that binds member states of the EU, member states in the European continent together. And so to be a member of this union, a country needs to comply with the standards and the rules that are imposed by the EU and they need to obtain an approval from all member states within the EU. They also have to have stable institutions that apply democracy and ensure that the rule of law is properly respected. And also they need to have a functioning market economy. And again, for us, what is important is to look at this particular criteria because if they want to transform or if they want to opt for using the single currency, this is going to be playing a crucial role. After this, they also need to have the ability to effectively implement all the obligations imposed by the EU. Now, why should a country opt for joining the EU? Basically, one of the main advantages that they will have is the access to a single market. Now, the EU in general acts as one big market with the freedom to transfer products and services freely between states without having any imposed restrictions, no extra tariffs, no taxes. And so it makes and facilitates trade within the block easily and without any extra expenses. And because of this, there is an increased economic integration within the member states. And at the same time, it does increase efficiency between member states. Now, with this in mind, this helps basically enhance and decrease the limit of important exports. So the limit of trade between EU member states on the one hand and on the other hand, because of the EU's breadth of treaties, trade treaties that it has with other third country states, it allows these new member states that are opting in for the EU membership to benefit from these international trade agreements. Now, to use the single currency, of course it comes with its own benefits. And for a country to opt for using a single currency, one of the main benefits that it will get is basically the ease of price comparison between the different member states. Another thing would be to facilitate internal and external trade at a cheaper rate. And finally, it also helps increase growth and price stability within the union. Now, these help in improving the economic stability of the member state. And at the same time, it helps create a more efficient financial markets and have a bigger and greater global influence. Now, if we want to look at Brexit, and one of the main benefits that the UK had while it was member of the EU, while it was part of the EU agreement, was the passporting rights. Now, passporting rights in the financial industry is basically a system that allows EU and European economic area of financial institutions to basically trade freely with minimal restrictions, minimal authorizations within these member states. So basically it is an integration and it helps facilitate financial, it helps facilitate the businesses of financial institutions easily within member states. Now, the UK's departure from the EU means that this kind of benefit is not going to be there anymore. And trading with securities between the UK and the EU is going to become a little harder rather than how easier it was during the UK's presence at the EU. Now, the other side effect or the negative impact that the UK may be experiencing as a result of their departure from the EU is basically trade difficulties. And because of their access to the single market previously, that meant there were no barriers to trade between the EU and the UK. However, now as they become a third country, this means that there are going to be some trade restrictions, there will be some delays and imports, there will be some red tape associated with facilitating trade between the EU and the UK. Now, on the additionally to all of this, we will be witnessing the exodus of financial services from the UK because these financial services, these financial institutions would like to benefit from the access to a single market to the EU single market. And so that loss of fright that the UK has lost as a result of the withdrawal from the EU is going to impact the amount of financial institutions representation within the UK. Now, if we want to look at some of the benefits of basically becoming part of the EU, now, what this means is that there is an increased monetary stability between member states, there is a simulation for the real estate market, there is an increase, there is a rising in the wages and as well, there is an increased rate of competition, all of this helps simulates the economy. And so there are many benefits to becoming a member state of a single market or off a trading block in a particular region. But with this, let's try to think about something. For next time, how about you do a little bit of research and find out some of the reasons why a country should opt for becoming part of a single currency or even be part of a single market? Why do you think should a country opt for an option like this? Do you think it is worth looking into? Do you think it is better than trading on their own or having their own unique sovereign currency and at the same time have just international trade agreements with other countries? Or perhaps is it better to be part of a single market and have a single currency? What are your thoughts? I'll see you next week.