Monetary union
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In economics, a monetary union is a situation where several countries have agreed to share a single currency (also known as a unitary or common currency) among them, for example, the East Caribbean dollar. A monetary union differs from an economic and monetary union, where it is not just currency but also economic policy that is pooled or co-ordinated (as in the European Union Eurozone, for instance).
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[edit] Existing monetary unions
- The CFA franc BEAC is used by Cameroon, the Central African Republic, Chad, the Republic of the Congo, Equatorial Guinea and Gabon and is issued by the Communauté Économique et Monétaire de l'Afrique Centrale (CEMAC), i.e. the Economic and Monetary Community of Central Africa.
- The CFA franc BCEAO is used by Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo and is issued by the Union Économique et Monétaire Ouest Africaine (UEMOA), i.e. the West African Economic and Monetary Union.
- The CFP franc is used by French Polynesia, New Caledonia, and Wallis and Futuna and is issued by the Institut d'émission d'outre-mer (IEOM), i.e. the Overseas Issuing Institute.
- The East Caribbean dollar is used by Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines and is issued by the Eastern Caribbean Currency Union of the Organisation of Eastern Caribbean States (OECS).
- The euro is used by fifteen European Union member states: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain and is also used in Monaco, San Marino, and the Vatican City which are licensed to issue and use the euro. Agreements were also concluded for two overseas territories of France. Saint-Pierre-et-Miquelon off the coast of Canada, and Mayotte in the Indian Ocean are outside the EU but have been allowed to use the euro as their currency. They are, however, not allowed to mint any of their own coins. Finally, four other countries and a subnational entity use the euro but are not licensed to issue any euro coins or notes, Akrotiri and Dhekelia, Andorra, Montenegro and Kosovo. (See de facto monetary unions below for these territories). The euro is issued by the European Central Bank.
[edit] De facto monetary unions
- See also: dollarization
- The Armenian dram is used as legal tender in both Armenia and the self-declared independent Nagorno-Karabakh Republic.
- The Australian dollar is used by Australia, Kiribati, Nauru, and Tuvalu.
- In the countries of Brunei and Singapore, the Brunei dollar and the Singapore dollar are legal tender in both countries.
- The euro is used as legal tender in Andorra, Kosovo and Montenegro although they are not a part of the Eurozone. (Andorra used the French franc and the Spanish peseta prior to the euro transfer, while Montenegro and Kosovo used the German mark.)
- The Hong Kong dollar is legal tender in Hong Kong and accounts for the majority of circulation in neighbouring Macau (alongside Macau pataca which is linked to the Hong Kong dollar nearly at par [1]).
- The Indian rupee is legal tender in both India and Bhutan (alongside the ngultrum). It is also freely used as a tender in Nepal, due to the instability caused by that country's civil war.
- The New Zealand dollar is used by New Zealand, Niue, the Cook Islands, Tokelau, and the Pitcairn Islands.
- The Palestinian territories under the control of the Palestinian National Authority use the Israeli new shekel and Jordanian dinar (the latter in the West Bank only).
- The Russian ruble is used in Russia and the Georgian autonomous (self-declared independent) republics of Abkhazia and South Ossetia.
- The South African rand is legal tender in South Africa, Swaziland, Lesotho, and Namibia through the Common Monetary Area.
- The Swiss franc is legal tender in Switzerland and Liechtenstein.
- The Turkish new lira is legal tender in both Turkey and the self-proclaimed Turkish Republic of Northern Cyprus.
- The United States dollar is used by the United States and its possessions, Palau, Micronesia, the Marshall Islands, Panama (alongside the Panamanian balboa), Ecuador, El Salvador, the British Virgin Islands and the Turks and Caicos Islands.
[edit] Planned monetary unions
- East African Community (EAC) with the proposed currency being named the East African shilling, planned to be introduced in 2009, and to be used by the future East African Federation.
- West African Monetary Zone inside Economic Community of West African States (ECOWAS) with the proposed currency being named the Eco, finally planned to be introduced in December 2009 after the date was set back twice.
- Gulf Cooperation Council (GCC), planned to be introduced in 2010 with the proposed name of the Khaleeji.
- Caribbean Single Market and Economy (CSME) (as part of the CARICOM) due between 2010 and 2015.
- Union of Russia and Belarus, originally due in 2004, but which might be introduced in 2008 (plans were apparently dropped when the Central Bank of Belarus announced the Belarusian Ruble would be tied to the US dollar).
- Southern African Development Community/Southern African Customs Union (SADC)/(SACU), due in 2016.
- Union of South American Nations (Unasur/Unasul), due in 2019. Ecuador's President Rafael Correa on Dec. 15, 2007 proposed to call the currency the "latino."
- Common Market for Eastern and Southern Africa, due in 2025.
- African Economic Community due in 2028.
[edit] Proposed monetary unions
- Asian Currency Unit, between ASEAN, China, Japan, and South Korea
- between Canada, the United States and Mexico to a North American currency union known as the Amero
- between Australia, New Zealand and Papua New Guinea[citation needed]
- Universal Sovereign Nations Dollar: The USN$. Using similar initials to the US$, the USN$ would have greater appeal in the USA than the Amero and countries outside the Americas can opt in.
[edit] Previous monetary unions
- 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
- Belgium-Luxembourg Monetary Union (1922-2002), superseded by the European EMU
- 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
- 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
- North German thaler (basically the Prussian thaler)
- Ruble zone countries
- 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
- between South Africa and Botswana, using the South African rand from 1966 until 1976
- between Egypt and Sudan using the Egyptian pound - until 1956
- 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
[edit] See also
[edit] External links
- The history of monetary unions
- 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
