Forex Trading and the Euro
Money is a complicated subject, that's why forex and currency trading is so difficult to master. The currency system of our own nation is hard enough
to comprehend, especially since the end of the gold standard. Now countries can print as much of their own currency as they want - the inherent
dangers being inflation and deflation. For most of the world, the U.S. dollar is the standard that all other currencies are based on, making actual paper
dollars quite a commodity. Now, take into consideration that we print or withhold currency as the administration dictates and you can start to see how
currency trading works.
What is a Euro?
Euros are the standard currency unit of the European Union, or Eurozone, and are a favorite among currency traders. The Eurozone is an economic
and monetary union of 16 European countries: Austria, Belgium, Cypress, Finland, France, Germany, Greece, Italy, Ireland, Luxemburg, Malta, the
Netherlands, Portugal, Slovakia, Slovenia and Spain. Eight other countries are obligated to join once they meet certain economic criteria. Member
countries mint Euros as their currency, making trade between the member nations easier.
Stability and Growth Pact
The Eurozone and the Euro came about due to the SGP or Stability and Growth Pact. The SGP was initially spearheaded by former German Finance
Minister, Theo Waigel, in the mid 90s. Germany's low-inflation policy had been credited with the countries strong economic performance and the
same was hoped for the entire European market. The SGP is an agreement between the 16 official members of the EU (eight other countries are lined
up for membership and several others use the Euro, but are not members of the European Central Bank). The intent was to stabilize and to maintain
the economy of the Eurozone through fiscal discipline. This goal was to be achieved by 1) fiscal monitoring by the European Commission, the
executive body of the EU which operates as a cabinet government; and 2) Sanctions, which are only used aft