Question

Beginning in 1995, most countries in the European Union started to switch to a common currency. The values of different European currencies were linked to the euro. Countries in the European Union could then trade without converting currency. Why would adopting a common currency be helpful for European traders?

Answer 1

Adopting a common currency can be helpful to European traders because this means that the value of that currency is the same in all the European countries. This is unlike if each country had a different currency. When country A's currency has a higher value than country B's, then traders from country A will benefit more than traders from country B if they were engaging in cross border trade.