Advanced

Currency Unions

Ögren, Anders LU (2019) p.1-24
Abstract
Currency unions have been a recurring phenomenon in monetary history. The most basic definition of a currency union is when two or more sovereign nations share a common currency. Even though a currency union shares many characteristics with international monetary regimes based on fixed exchange rates (such as the Bretton Wood system), it is the most extreme case of a fixed exchange rate as it also implies sharing a common unit of account between the participating countries. While the economic rationale for currency unions focuses on gains in monetary efficiency from decreasing transaction costs, history shows that political reasons also played a key role. In this chapter, I discuss the theoretical foundations of monetary unions (the... (More)
Currency unions have been a recurring phenomenon in monetary history. The most basic definition of a currency union is when two or more sovereign nations share a common currency. Even though a currency union shares many characteristics with international monetary regimes based on fixed exchange rates (such as the Bretton Wood system), it is the most extreme case of a fixed exchange rate as it also implies sharing a common unit of account between the participating countries. While the economic rationale for currency unions focuses on gains in monetary efficiency from decreasing transaction costs, history shows that political reasons also played a key role. In this chapter, I discuss the theoretical foundations of monetary unions (the so-called optimum currency area theory) and analyze the most important historical cases of currency unification, both domestic (the USA, Germany) and international. Finally I discuss the key lessons we can draw from the history of currency unions and their implications for the Economic and Monetary Union. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Chapter in Book/Report/Conference proceeding
publication status
published
subject
keywords
Central banks, Fiscal systems, Monetary theory, Monetary policy, Optimum currency areas
host publication
Handbook of the History of Money and Currency
editor
Battilossi, Stefano ; Cassis, Youssef ; Yago, Kazuhiko ; ; and
pages
1 - 24
publisher
Springer Nature Singapore
ISBN
978-981-10-0622-7
DOI
10.1007/978-981-10-0622-7_28-1
language
English
LU publication?
yes
id
62ecdab0-1a1b-4604-bbab-fec9d7771c6d
alternative location
https://link.springer.com/referenceworkentry/10.1007/978-981-10-0622-7_28-1
date added to LUP
2019-11-14 11:55:07
date last changed
2019-11-14 14:17:20
@inbook{62ecdab0-1a1b-4604-bbab-fec9d7771c6d,
  abstract     = {Currency unions have been a recurring phenomenon in monetary history. The most basic definition of a currency union is when two or more sovereign nations share a common currency. Even though a currency union shares many characteristics with international monetary regimes based on fixed exchange rates (such as the Bretton Wood system), it is the most extreme case of a fixed exchange rate as it also implies sharing a common unit of account between the participating countries. While the economic rationale for currency unions focuses on gains in monetary efficiency from decreasing transaction costs, history shows that political reasons also played a key role. In this chapter, I discuss the theoretical foundations of monetary unions (the so-called optimum currency area theory) and analyze the most important historical cases of currency unification, both domestic (the USA, Germany) and international. Finally I discuss the key lessons we can draw from the history of currency unions and their implications for the Economic and Monetary Union.},
  author       = {Ögren, Anders},
  booktitle    = {Handbook of the History of Money and Currency},
  editor       = {Battilossi, Stefano and Cassis, Youssef and Yago, Kazuhiko},
  isbn         = {978-981-10-0622-7},
  language     = {eng},
  month        = {10},
  pages        = {1--24},
  publisher    = {Springer Nature Singapore},
  title        = {Currency Unions},
  url          = {http://dx.doi.org/10.1007/978-981-10-0622-7_28-1},
  doi          = {10.1007/978-981-10-0622-7_28-1},
  year         = {2019},
}