The Eurozone refers to the economic and geographical region consisting of all countries of the European Union (EU) that use the euro as their national currency.
In 1992, the Maastricht Treaty created the EU and paved the way for a common economic and monetary union consisting of a central banking system, a single currency and a common economic region, the eurozone.
The euro area includes the following 19 EU countries: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
Not all countries of the European Union are members of the Eurozone; some choose to use their own currency and maintain their financial independence.
European Union countries that choose to participate in the eurozone must meet the requirements for price stability, sound public finances, durability of convergence and exchange rate stability.
The European Monetary System (EMS) was a managed exchange rate agreement created in 1979 to promote closer cooperation on monetary policy among members of the European Community (EU).
An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors.
Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade.
The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP).
The Bretton Woods Agreement and the system created a collective international currency exchange regime that operated from the mid-1940s to the early 1970s.