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[edit]

Existing[edit]

Every Customs and monetary union and Economic and monetary union also has a currency union; these are not listed below.


Currency Union Users Est. Status Population GDP (nominal $)
CFA franc Issued by the (French) Overseas Issuing Institute between 1945−1962 then by the Central Bank of West African States and the Bank of Central African States  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 50,000,000
CFP franc Issued by the (French) Overseas Issuing Institute  French Polynesia
 New Caledonia
 Wallis and Futuna
1945 Formal, common policy 528,000
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]
625,000
Euro International status and usage of the euro European Union Eurozone:

 Austria
 Belgium
 Cyprus
 Estonia
 Finland
 France
 Germany
 Greece
 Ireland
 Italy
 Latvia
 Luxembourg
 Malta
 Netherlands
 Portugal
 Slovakia
 Slovenia
 Spain


and EU special territories: United Kingdom Akrotiri and Dhekelia (SBAs)
 French Southern and Antarctic Lands
 Mayotte
 Saint Barthélemy
 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 de facto EMU with the Eurozone)
Formal for Andorra since 2011
Informal for Kosovo, Montenegro
Formal for the rest
328,655,062
Hong Kong dollar  Hong Kong

 Macau

1977 Informal; Decreto-Lei n.º 16/95/M prohibiting the refusal of the pataca by merchants and businesses.[2] 7,775,200
Singapore dollar

Brunei dollar

Managed together by the Monetary Authority of Singapore  Brunei

 Singapore

1967 Formal; currencies mutually exchangeable[3] 5,137,000 36,438,000,000
Armenian dram  Armenia

 Nagorno-Karabakh Republic

1994 Informal 3,368,900 18,715,000,000
Australian dollar  Australia

and external territories:
Australia Ashmore and Cartier Islands
Australia Australian Antarctic Territory
 Christmas Island
 Cocos (Keeling) Islands
Australia Coral Sea Islands
Australia Heard Island and McDonald Islands
 Norfolk Island


 Kiribati
 Nauru
 Tuvalu

1966 Informal 22,557,000
Pound sterling Sterling area (former)  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 Semi-formal. UK banknotes are legal tender in locations outside the UK. Local currencies are pegged to the GBP but not necessarily accepted in the UK: Guernsey pound, Manx pound, Jersey pound and Alderney pound, Falkland Islands pound, Gibraltar pound, Saint Helena pound 62,321,000
Indian rupee  Bhutan

 India[4]
   Nepal[5]

1974 Informal

Nepal minor usage

1,215,083,000
New Zealand dollar  New Zealand

and dependencies:
 Tokelau
New Zealand Ross Dependency


 Cook Islands
 Nauru
 Niue
 Pitcairn Islands

1967 Informal 4,411,000
Israeli new sheqel  Israel

 Palestine

1927/1986 Informal 11,738,000
Jordanian dinar[citation needed]  Jordan

 Palestine (West Bank only)

Informal 8,922,000
Russian ruble  Abkhazia

 Russia
 South Ossetia

2008 Informal 142,177,000
South African rand Multilateral Monetary Area  Lesotho

 Namibia
 South Africa
 Swaziland

1974 Formal
de facto customs and monetary union for SACU members
52,924,669 316,936,000,000
Swiss franc  Liechtenstein

  Switzerland

1920 Informal
since 1924 creation of a customs union and common market in EFTA in a de facto EMU
7,774,546 497,171,000,000
Turkish lira  Turkey

 Turkish Republic of Northern Cyprus

1983 Informal 75,081,100 734,043
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
Netherlands BES islands

1904

(Panama only)

Formal for insular areas and sovereign status with Compact of Free Association,[6] informal for other areas 339,300,000

 Zimbabwe is theoretically in a currency union with four blocs as the South African rand, Botswana pula, British pound and US dollar freely circulate, the US Dollar being official tender. [1].

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 through the trade pacts signed by the mainland state.[7]

Planned[edit]

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 Alliance for the Americas.
East African Community East African shilling Africa 2015
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 2015 a free trade agreements matrix partially established
Cooperation Council for the Arab States of the Gulf Khaleeji Persian Gulf c. 2013-2020[8][9] Oman and the United Arab Emirates do not intend to adopt the currency at first but will do at a later date.

Disbanded[edit]

Never materialized[edit]

  • 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[edit]

References[edit]

  1. ^ Anguilla and Montserrat are members of OECS currency union, but not of the CSME.
  2. ^ http://www.marcasepatentes.pt/files/collections/pt_PT/1/2/14/CPI%201995.pdf Decreto-Lei n. 16/95/M
  3. ^ 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.
  4. ^ alongside the ngultrum
  5. ^ 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.
  6. ^ Compact of Free Association, Article V, Section 251
  7. ^ 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.
  8. ^ http://www.arabianbusiness.com/575538-kuwait-sees-gcc-currency-union-taking-up-to-10-years
  9. ^ www.dunatv.hu (Hungarian)
  10. ^ a b Bolton, Sally (10 December 2001). "A history of currency unions". guardian.co.uk. Retrieved 26 February 2012. "France persuaded Belgium, Italy, Switzerland and Greece" 
  11. ^ Not currently on any political agenda, based mostly off conspiracy theories.

Further reading[edit]

External links[edit]

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