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^{[citation needed]}
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.

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	Eurozone (17)  Austria  Belgium  Cyprus  Estonia  Finland  France  Germany  Greece  Ireland  Italy  Luxembourg  Malta  Netherlands  Portugal  Slovakia  Slovenia  Spain and EU special territories Akrotiri and Dhekelia (SBAs)  French Southern and Antarctic Lands  Mayotte  Saint Pierre and Miquelon  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 and external territories Ashmore and Cartier Islands Australian Antarctic Territory  Christmas Island  Cocos (Keeling) Islands Coral Sea Islands Heard Island and McDonald Islands  Norfolk Island  Kiribati  Nauru  Tuvalu	1966	Informal	&1000000002255700000000022,557,000
Pound sterling	Sterling area	United Kingdom and overseas territories  British Antarctic Territory  British Indian Ocean Territory  Falkland Islands  Gibraltar  Saint Helena, Ascension and Tristan da Cunha  South Georgia and the South Sandwich Islands and crown dependencies  Guernsey  Isle of Man  Jersey	1939	Formal, local variants used.	&1000000006232100000000062,321,000
Norwegian krone		Norway and dependencies  Bouvet Island Queen Maud Land Peter I Island		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 and dependencies  Tokelau Ross Dependency  Cook Islands  Niue  Pitcairn Islands	1967	Informal	&100000000044110000000004,411,000
Israeli new sheqel		Israel  Palestine	1927/1986	Informal	&1000000001173800000000011,738,000
Jordanian dinar[citation needed]		Jordan  Palestine (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 and insular areas  American Samoa  Guam  United States Minor Outlying Islands  Northern Mariana Islands  Puerto Rico  United States Virgin Islands  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.

Currency unions

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

• 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

See also

• List of pegged currencies
• North American Currency Union (Amero)^[12]

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