Eurozone vs EU
The Eurozone and EU both refer to entities that have been formed mainly by countries located in Europe. These two are quite similar to each other and are governed by a number of similar organizations such as the European central bank. The subtle differences between Eurozone and EU, usually, make the two very difficult to distinguish. However, they are different to each other mainly because one is a union formed based on a common currency; while the other is a union formed based on facilitating better trade and economic activity. The following article provides a more comprehensive explanation between the two and better outlines their differences.
Eurozone
The Eurozone is a union of countries that use the same currency called the Euro. The Euro is used by 17 member states in the European Union which include countries such as Belgium, Austria, France, Italy, Spain, Cyprus, Estonia, etc. Since all members of the Eurozone use a common currency, the monetary policies of these countries are set by a common entity, which is the European Central Bank. The ECB’s main focus is on making sure inflation in the Eurozone is kept under control.
There are a number of benefits in using a common currency for the Eurozone; these include no exchange rate risk, facilitating better trade in terms of imports and exports (which are now the same price to everyone since there is no exchange rate cost) and strengthening of the stability of the currency even in terms of other currencies.
The major disadvantage is in having to follow common economic policies that may not be conducive to the very different economic and political conditions prevalent in each country.
European Union (EU)
The European Union is made of a number of countries who have come together to form a political and economic entity so that their governments may work together for the benefit of the member countries. There are a number of rules and requirements that must be met in order for countries to be included into the EU, and these member countries receive various benefits in doing so.
There are 27 member countries in the EU; however, not all member countries use the Euro as their currency. The main purpose in forming the EU was to facilitate better trade and free movement of goods and services, capital, and other resources among the member countries. As such, these countries follow rules that allow them to follow the same trade policy facilitating better trade within the EU.
Eurozone vs European Union
The main similarity between the EU and Eurozone is that both these unions are formed by countries primarily in Europe. The EU refers to countries that use a common currency and thereby enjoy benefits such as better international trade and currency stability; however disadvantages include having to follow the same monetary policy which will not suit the varying economic conditions in the member countries.
The Eurozone is a union of countries that have come together to facilitate free trade and movement of resources thereby improving economic conditions of all countries that a member.
Summary:
• The Eurozone and EU both refer to entities that have been formed mainly by countries located in Europe.
• These two are quite similar to each other and are governed by a number of similar organizations such as the European central bank.
• They have quite distinctive differences mainly because one is a union formed based on a common currency; while the other is a union formed based on facilitating better trade and economic activity.