Currency union

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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:

  1. Informal - unilateral adoption of foreign currency
  2. 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
  3. 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.

Contents

List of currency unions

Every Customs and monetary union and Economic and monetary union also has a Currency Union

Currency Union Users Est. Status Population GDP (nominal $)
CFA franc Issued by Overseas Issuing Institute (France)  Benin
 Burkina Faso
 Côte d'Ivoire
 Guinea-Bissau
 Mali
 Niger
 Senegal
 Togo
 Cameroon
 Central African Republic
 Chad
 Republic of the Congo
 Equatorial Guinea
 Gabon		 1945 Formal, common policy &1000000005000000000000050,000,000
CFP franc Issued by Overseas Issuing Institute (France)  French Polynesia
 New Caledonia
 Wallis and Futuna		 1945 Formal, common policy &10000000000528000000000528,000
East Caribbean dollar Eastern Caribbean Currency Union of the OECS  Anguilla
 Antigua and Barbuda
 Dominica
 Grenada
 Montserrat
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and the Grenadines		 1965 Formal, common policy
de-facto EMU for CSME members[1]		 &10000000000625000000000625,000
Euro International status and usage of the euro  Andorra
 Kosovo
 Monaco
 Montenegro
 San Marino
 Vatican City		 1999/2002 Formal, common policy and EMU for EU members
Formal for Monaco and SBAs (those form a and de-facto EMU with the Eurozone)
Informal for Andorra, Kosovo, Montenegro
Formal for the rest		 &10000000328655062000000328,655,062
Singapore dollar
Brunei dollar		 Managed together by the Monetary Authority of Singapore  Brunei
 Singapore		 1967 Formal; currencies mutually exchangeable[2] &100000000051370000000005,137,000 &1000003643800000000000036,438,000,000
Armenian dram  Armenia
 Nagorno-Karabakh Republic		 1994 Informal &100000000033689000000003,368,900 &1000001871500000000000018,715,000,000
Australian dollar  Australia  Kiribati
 Nauru
 Tuvalu		 1966 Informal &1000000002255700000000022,557,000
Pound sterling Sterling area  United Kingdom 1939 Formal, local variants used. &1000000006232100000000062,321,000
Norwegian krone  Norway Formal &100000000049000000000004,900,000
Indian rupee  Bhutan
 India[3]
 Nepal[4]		 1974 Informal
Nepal minor usage		 &100000012150830000000001,215,083,000
New Zealand dollar  New Zealand  Cook Islands
 Niue
 Pitcairn Islands		 1967 Informal &100000000044110000000004,411,000
Israeli new sheqel  Israel
 1927/1986 Informal &1000000001173800000000011,738,000
Jordanian dinar  Jordan
(West Bank only)		 Informal &100000000089220000000008,922,000
Russian ruble  Abkhazia
 Russia
 South Ossetia		 2008 Informal &10000000142177000000000142,177,000
South African rand Multilateral Monetary Area  Lesotho
 Namibia
 South Africa
 Swaziland		 1974 Formal
de-facto customs and monetary union for SACU members		 &1000000005292466900000052,924,669 &10000316936000000000000316,936,000,000
Swiss franc  Liechtenstein
 Switzerland		 1920 Informal
since 1924 creation of a customs union and common market in EFTA in a de-facto EMU		 &100000000077745460000007,774,546 &10000497171000000000000497,171,000,000
Turkish lira  Turkey
 Turkish Republic of Northern Cyprus		 1983 Informal &1000000007508110000000075,081,100 &10000000000734043000000734,043
United States dollar  United States  Ecuador
 El Salvador
 Panama
 Marshall Islands
 Federated States of Micronesia
 Palau
 Timor-Leste
 Turks and Caicos Islands
 British Virgin Islands		 1904
(Panama only)		 Informal &10000000339300000000000339,300,000

 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.[5]

Proposed

Community Currency Region Target date Notes
Bolivarian Alternative for the Americas SUCRE Latin America
/Caribbean		 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[6]
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[7][8] 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[9] or Northern Euro[10] Europe Theoretical (2015)[11] See European sovereign debt crisis, Scandinavian Monetary Union, and Hanseatic League

Previous

See also: Bretton Woods Conference

See also

References

  1. ^ Anguilla and Monserrat are members of OECS currency union, but not of the CSME.
  2. ^ 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.
  3. ^ alongside the ngultrum
  4. ^ 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.
  5. ^ 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.
  6. ^ http://ideas.repec.org/p/wpa/wuwpif/0508001.html
  7. ^ http://www.arabianbusiness.com/575538-kuwait-sees-gcc-currency-union-taking-up-to-10-years
  8. ^ www.dunatv.hu (Hungarian)
  9. ^ (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. 
  10. ^ (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. 
  11. ^ 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. 
  12. ^ Not currently on any political agenda, based mostly off conspiracy theories.

External links

African monetary union inches closer United States of Southern Africa?
East Africa's first steps towards union West Africa opts for currency union
Gulf States push for single currency 'Limited gains' from Gulf single currency
Do the Mercosur Countries Form an Optimum Currency Area? Argentina plans monetary union
Quadrant Magazine article on the Pacific Economist- Antipodean currencies (Australia and New Zealand)
Three Perspectives on an Australasian Monetary Union Reasons for the collapse of the Rouble Zone
In Search of the "Ruble Zone" OECD Development Centre- the Rand Zone
A single African currency in our time? South Africa proposes adoption of the rand as provisional SADC common currency