Monetary union

a monetary union is a union of several sovereign that states, which have a common currency and a common monetary policy to operate.

important monetary unions

• the European monetary union alsothe currency euro
• the westAfrican economic and monetary union with the currency CFA franc
• the Central African economic and monetary union with the currency CFA franc
• the eastCaribbean monetary union with the currency eastCaribbean dollar

planning possible monetary unions

• East Africa niche community starting from 2009
• gulf co-operation advice starting from 2010
• Caribbean community
• South American community of states
• Russian-Byelorussian union

former monetary unions in Europe

monetary unions between European states gave it already in former times:

• The Scandinavian Münzunion between Sweden, Denmark and Norway (1873 to 1914)
• latin Münzunion between France, Belgium, Italy, Switzerland and Greece(1865 to 1927)
• the monetary union after the establishment of the German Reich 1871. With it the gulden currency of the South German states and the valley currency of the north German states were replaced by the again created Mark, which was based on the decimal system.
• The UEBL (union Economique Belgo - Luxembourgoise) between Luxembourg and Belgium (1922 to 2002)
• the monetary union of the Federal Republic with the GDR, which preceded in principle in the year 1990 of the reunification and the task of the Marks of the GDR and the introduction of the D-mark were in the GDR at that time.

Economic view

an important disadvantage of a monetary union recognized Robert A. Mundell in its theory of the optimal currency area. Monetary unions require a increased measure of geographical flexibility of the citizens, in order to adjust the lost possibility of the flexible rate of exchange by the introduction of a common currency.