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Crystal Clearance: EU price transparency

Reid, Gavin C. and Smith, Julia A. (2003) Crystal Clearance: EU price transparency. Financial Management, April. pp. 26-27. ISSN 1471-9185

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Abstract

The eurozone is a major economic coalition. Covering a population of around 350 million, it closely rivals the US in terms of its combined gross domestic product and share of world trade. The introduction of the single currency on January 1, 2002 started an economic revolution through its effect on price transparency. It is now obvious if a Ford Mondeo is 20% more expensive to buy in Germany, for example, than it is in the Netherlands. Consumers should gain from this change. The single currency has had many major effects on firms trading in the eurozone, including: 1. Some firms opened euro bank accounts to reduce the risk of exchange rate fluctuations. 2. Information and administrative systems had to be modified to handle euros. Increases in price transparency do squeeze profit margins.