Can someone shed some light on the Euro really?
Basically, having a single currency means that now countries within the European Union don't have to be concerned at all about their balance of trade with other countries using the Euro.
A country's currency is backed by gold, Special Drawing Rights, and foreign currency held by its central bank. But this reserve amounts only to a small fraction of the currency in circulation, let alone the entire money supply. Instead, the money supply is backed by something rather less liquid - the assets used as collateral on bank loans.
So when a country spends more on imports than it earns with exports, it has to rectify that situation quickly, or its currency will lose value as the country plunges into debt. Due to international agreements limiting tariffs, this usually means countries have to adopt restrictive policies that throw people out of work.
The European Community was a customs union from the beginning, but now the European Union has its own European Parliament. And so it's only reasonable that, to make the customs union work more smoothly, and lead to the greater integration of the economies of the member nations, that the EU is adopting one of the other characteristics of a single country - a single currency.
