The Euro and Germany's Trade Surplus The euro was introduced in 1999 to facilitate the free movement of labor and goods between countries within the European Union. A common currency used by its member states allowed European consumers to immediately see the price of a product, instead of seeing the price in the currency of a different member state and having to run it through a converter to see the price in the local currency. Although the euro has made it easier to purchase goods across borders, one of the main negative aspects of the euro is its inability to match the economic conditions of each of the EU member states. Germany's robust economy has led to a massive trade surplus and consequently had a negative effect on the economies of the rest of the EU. The euro has a value compared to most EU countries and when a country like Germany prospers, there are negative consequences for a common currency that governs multiple nations. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay The common currency of the euro has made it easier to buy and travel across the EU. Changing currency when traveling to other countries and paying a fee to do so are a thing of the past. It made shopping across borders convenient with the price listed in euros, regardless of whether the retailer was located in France or Portugal. The advantage of having a common currency was also its biggest disadvantage. The value of the euro is the same in Germany and Greece, regardless of the economic conditions of each of the countries. Currently, two member states have renounced the Eurozone and the obligation to adopt the euro currency. Denmark chose not to adopt the euro as a condition of the 1992 Maastricht Treaty and the UK is in the process of withdrawing from the EU altogether. EU economies have been struggling since the market crash after the 2007 financial crisis. 2008. One major exception was Germany. A country with a robust economy supported by high-end exports including automobiles, machinery, electronics, appliances and pharmaceuticals. Germany has been praised for its economic success and rightly so, but has its success been bad for the rest of the EU? The global economy is healthier when money is distributed everywhere and no country has a massive trade surplus or deficit. A country like Germany that has a large trade surplus, meaning it exports or sells many products to the rest of the world, but does not spend the money it earns. This means that Germans are not returning the favor by spending that money on fine Italian wines or Greek olive oil, which would help those countries' economies. So the answer is that Germany's trade surplus is bad for the EU, but it's not entirely Germany's fault. A good part of this has to do with the value of the euro. According to the International Monetary Fund, the value of the euro compared to Germany is undervalued by approximately 5-15%. When a country's economic well-being is high, as is the case in Germany, the value of the local currency should increase to balance the trade surplus. In this case, if Germany had a local currency like it did before the euro with the Deutsche Mark, the rise in the local currency would balance the trade surplus by making German goods more expensive, but instead the common currency of the euro fell further due to the faltering economies of the rest of the EU, which only makes German goods even cheaper, further exacerbating the trade surplus, which.