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have created 2.75 million new jobs19. While you should perhaps take these very precise estimates with a grain of salt, there can certainly be no doubt that the effect is very positive given the strong theoretical case for the removal of free competition across borders described in chapters 1 and 2.

3.4 The Euro and Competition

One way in which the EU has promoted competition is through the creation of the euro. The effects of the euro on competition are much more complex and therefore less immediately apparent than the other EU policies discussed previously. This is probably why there is more political opposition to the euro, particularly in countries like Sweden, Denmark and the U.K., than to most other EU projects promoting competition 20. Here focus will be on the way in which the euro promotes cross-border competition and trade.

One reason why the existence of separate national currencies will inhibit cross-border trade is that it will necessarily be associated with transaction costs when people are forced to exchange their currencies at a bank or other currency dealer. Of course, these costs are not big, particularly for large companies, but they still reduce trade somewhat. This means that the costs for the economy not only include the unnecessary diversion of resources to the currency exchange business but the cost also includes all the transactions not made because of the transaction costs. This will be true not only for trade with goods and services, but also for financial transactions.

Another reason as to why separate currencies represent a barrier to trade is that it decreases transparency. That is, it becomes somewhat more difficult to compare prices in different countries and perform calculations. The costs of this will consist in the unnecessary time devoted to

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    translating« the prices in foreign currencies as well as the transactions not made because of the

extra trouble this means. This is of course an even smaller barrier to trade than transaction costs as most people, not to mention large corporations, have little trouble multiplying or dividing

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