Analyze Assignment Example | Topics and Well Written Essays - 500 words - 1

Analyze - Assignment Example In this regard, it becomes less expensive to settle sovereign debt and penetrate integrated financial markets (Figge, 2010). Similarly, currency unions also help to promote trade liberalization because of the uniformity in the exchange values. For instance, during global inflationary periods, countries worst hit do not suffer from financial losses when trading with their partners (Figge, 2010). However, challenges also occur due to currency unions, sovereign debts and integrated financial markets. For example, there is the loss of an independent monetary policy, which affects the moderation of demand stocks and curbing of inflation rates (Figge, 2010). This implies that a country may be unable to execute monetary policies during inflation because it might affect international trade. It is apparent that introducing other monetary policies might involve the formation of a central bank to oversee the process. Another disadvantage is that currency unions may have a negative influence on developing countries when making investment decisions (Figge, 2010). This is because it limits the budget of the developing countries that cannot raise the required funds to initiate investments in the developed economies. The evolution of money involves the development of a medium of exchange unit during transactions. The first transaction was barter trade, which entails trading goods and services for other similar commodities. This implies that one would exchange his goods with other goods he needs or suits his wants. One of the cons of this system is that it enabled people to get what they wanted easily. This is because the two parties would agree on the commodities to exchange without problems (Davies & Julian Hodge Bank, 2002). Alternatively, it faced the problem of double coincidence of requirements in which one party had to fulfill the wants of the other. For instance, a person who had goats and wanted grains would not do