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.
Famous quotes containing the words currency and/or union:
“Both of us felt more anxiety about the South—about the colored people especially—than about anything else sinister in the result. My hope of a sound currency will somehow be realized; civil service reform will be delayed; but the great injury is in the South. There the Amendments will be nullified, disorder will continue, prosperity to both whites and colored people will be pushed off for years.”
—Rutherford Birchard Hayes (1822–1893)
“Visitors who come from the Soviet Union and tell you how marvellous it is to be able to look at public buildings without advertisements stuck all over them are just telling you that they can’t decipher the cyrillic alphabet.”
—Clive James (b. 1939)