A currency union (also known as monetary union) is where two or more states share the same currency, though without there necessarily having any further integration such as an Economic and Monetary Union, which has in addition a customs union and a single market.
There are three types of currency unions:
- Informal - unilateral adoption of foreign currency
- Formal - adoption of foreign currency by virtue of bilateral or multilateral agreement with the issuing authority, sometimes supplemented by issue of local currency in currency peg regime
- Formal with common policy - establishment by multiple countries of common monetary policy and issuing authority for their common currency
The theory of the optimal currency area addresses the question of how to determine what geographical regions should share a currency in order to maximize economic efficiency.
List of currency unions
Zimbabwe this theoretically in currency union with four blocs as it circulates the South African rand, Botswana pula, British pound and US dollar as official currencies.
Additionally the autonomous and dependent territories, such as some of the EU member state special territories, are sometimes treated as separate customs territory from their mainland state or have varying arrangements of formal or de-facto customs union, common market and currency union (or combinations thereof) with the mainland and in regards to third countries trough the trade pacts signed by the mainland state.
Community Currency Region Target date Notes Bolivarian Alternative for the Americas SUCRE Latin America
2010 It is planned to begin as an electronic currency involving all countries of the Bolivarian Alternative for the Americas. East African Community East African shilling Africa 2015 South Asian Association for Regional Cooperation Asia 2020 West African Monetary Zone Eco Africa 2020 Inside Economic Community of West African States, planned to eventually merge with West African franc ASEAN+3 Asian Monetary Unit Asia a free trade agreements matrix partially established Cooperation Council for the Arab States of the Gulf Khaleeji Persian Gulf circa 2013-2020 Oman and the United Arab Emirates do not intent to adopt the currency at first but will do at a later date. German-Dutch-Austrian-Nordic breakaway currency union Guilder or Northern Euro Europe Theoretical (2015) See European sovereign debt crisis, Scandinavian Monetary Union, and Hanseatic League
- between Bahrain and Abu Dhabi using the Bahraini dinar
- between Bahrain, Kuwait, Oman, Qatar and the Trucial States, using the Gulf rupee from 1959 until 1966
- between Aden and South Arabia, Bahrain, Kenya, Kuwait, Oman, Qatar, British Somaliland, the Trucial States, Uganda, Zanzibar and British India (later independent India) using the Indian rupee
- between British India and the Straits Settlements (1837–1867) using the Indian rupee
- between Czech Republic and Slovakia (briefly from January 1, 1993 to February 8, 1993) using the Czechoslovak koruna
- between Ethiopia and Eritrea using the Ethiopian birr
- between France, Monaco, and Andorra using the French franc
- between the Eastern Caribbean, Barbados, Trinidad and Tobago and British Guiana using the Eastern Caribbean dollar
- between Italy, Vatican City, and San Marino using the Italian lira
- between Ireland, and the United Kingdom using the Pound Sterling (Ireland used its own coins/banknotes of equivalent value) dissolved in 1979 when Ireland joined the European Monetary System without Britain
- between Jamaica and the Cayman Islands using the Jamaican pound and later Jamaican dollar
- between Kenya, Uganda and Zanzibar using the East African rupee
- between Kenya, Uganda and Zanzibar (and later Tanganyika) using the East African florin
- between Kenya, Tanganyika and Zanzibar (later merged as Tanzania), Uganda, South Arabia, British Somaliland and Italian Somaliland using the East African shilling
- Latin Monetary Union (1865–1927), initially between France, Belgium, Italy and Switzerland, and later involving Greece, Spain and other countries.
- between Liberia and the United States using the United States dollar
- between Mauritius and Seychelles using the Mauritian rupee
- between Nigeria, the Gambia, Sierra Leone, the Gold Coast and Liberia using the British West African pound
- between Prussia and the North German states (1838–1857) using the North German thaler
- between Russia and the former Soviet republics (1991–1993) using the Soviet ruble
- between Qatar and all the emirates of the UAE, except Abu Dhabi using the Qatari and Dubai riyal
- between Saudi Arabia and Qatar using the Saudi riyal
- between Samoa and New Zealand using the New Zealand pound
- between Denmark, Norway and Sweden in the Scandinavian Monetary Union
- between the Solomon Islands, Papua New Guinea and Australia using the Australian dollar
- South German guilder
- between Spain and Andorra using the Spanish peseta
- between Brunei, Malaysia, and Singapore (1953–1967) using the Malaya and British Borneo dollar
- between Cambodia, Laos, and Vietnam (1885–1952) using the French Indochinese piastre
- between South Africa and Botswana (1966–1976) using the South African rand
- between Egypt and Sudan using the Egyptian pound - until 1956
- between West Germany and East Germany between 1 July 1990 and 3 October 1990, as part of a temporary Monetary, Economic and Social Union prior to German reunification.
- proposed Pan-American monetary union - abandoned in the form proposed by Argentina
- proposed monetary union between the United Kingdom and Norway using the pound sterling during the late 1940s and early 1950s
- ^ Anguilla and Monserrat are members of OECS currency union, but not of the CSME.
- ^ To all intents and purposes a monetary union. They are the last two nations whose dollars have remained at par and mutually interchangeable since the days when the Spanish Dollar was the united currency of large areas of the New World and South East Asia.
- ^ alongside the ngultrum
- ^ Not official, but freely used as a tender in Nepal, due to primarily the economic flux with India and also the instability caused by that country's civil war.
- ^ EU Overseas countries and some other territories participate partially in the EU single market per part four of the Treaty Establishing the European Community; Some EU Outermost regions and other territories use the Euro of the currency union, others are part of the customs union; some participate in both unions and some in neither.
Territories of the United States, Australian External Territories and Realm of New Zealand territories share the currency and mostly also the market of their respective mainland state, but are generally not part of its customs territory.
- ^ http://ideas.repec.org/p/wpa/wuwpif/0508001.html
- ^ http://www.arabianbusiness.com/575538-kuwait-sees-gcc-currency-union-taking-up-to-10-years
- ^ www.dunatv.hu (Hungarian)
- ^ (German) Henkel, Hans-Olaf (22 June 2011). "Euro im Süden, Gulden im Norden". Kleine Zeitung. http://www.kleinezeitung.at/nachrichten/wirtschaft/2770243/hans-olaf-henkel-euro-sueden-gulden-norden.story. Retrieved 23 June 2011.
- ^ (German) Spethmann, Dieter (19 January 2011). "Deutschland verschenkt seinen Wohlstand". Frankfurter Allgemeine. http://www.faz.net/aktuell/finanzen/devisen-rohstoffe/im-gespraech-professor-dieter-spethmann-deutschland-verschenkt-seinen-wohlstand-1537181.html. Retrieved 05 October 2011.
- ^ Voth, Hans-Joachim (31 August 2011). "The Euro Can't Survive in Its Current Form". Spiegel. http://www.spiegel.de/international/europe/0,1518,783281,00.html. Retrieved 5 September 2011.
- ^ Not currently on any political agenda, based mostly off conspiracy theories.
Stages of economic integration
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