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as economic growth do influence trade and is mostly caused by factors unrelated to monetary unification. But if trade has really increased then that would raise economic growth. And secondly, the 13-14% number was the difference between the increase in intra euro zone trade and the increase in trade between euro zone countries and the control group. But as statistically adjusted trade between euro zone countries and the control group have increased a lot more than trade between countries in the control group, then there is reason to believe the euro have stimulated trade there too, which also means the boost to intra euro zone trade is larger.

This problem does not also exist within the realm of trade in goods and services, but also regarding financial transactions of course. If there is a risk that loans nominated in foreign currencies will rise in value, then people are going to be less willing to take these loans. And if there is a risk that assets nominated in foreign currencies will fall in value then people will be less willing to invest in those assets. And of course, the problems with transaction costs also exist in this area.

This has significance for two reasons. Firstly, if people can invest in several countries then their risk level can be reduced as they can invest not only in domestic assets but foreign assets too. Secondly, the bigger the currency area the bigger the credit market will be. The bigger the market for credits is, the greater the societal gains will be as this means a greater transfer of funds from people with a low time preference to people with a high time preference Which in turn means that saved funds will come to a better use. This is of course also true for countries. In some countries or regions the average time preference will be higher than in others. Partly because of different time preference on consumption but also because of differences in the amount of investment opportunities. This means that there should be a net transfer of credit from the country with low time preference to the country with high time preference. With a common interest rate in different countries and no exchange rate risks then the level of such transactions can of course be much greater. Just as a common interest rate within a country causes some companies who don't hav any investment plans that can pay off to return money to its stockholders, who can then transfer this money to companies which have investment opportunities which will yield higher than the prevailing interest rate, so a common interest between different countries will benefit


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