Monetary Union

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
  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
 Central African Republic
 Republic of the Congo
 Equatorial Guinea
1945 Formal, common policy 50,000,000
CFP franc Issued by Overseas Issuing Institute (France)  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
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and the Grenadines
1965 Formal, common policy
de facto EMU for CSME members[1]
Euro International status and usage of the euro  Andorra
 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
Singapore dollar
Brunei dollar
Managed together by the Monetary Authority of Singapore  Brunei
1967 Formal; currencies mutually exchangeable[2] 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 Kiribati
1966 Informal 22,557,000
Pound sterling Sterling area  United Kingdom 1939 Formal, local variants used. 62,321,000
Indian rupee  Bhutan
1974 Informal
Nepal minor usage
New Zealand dollar  New Zealand Cook Islands
 Pitcairn Islands
1967 Informal 4,411,000
Israeli new sheqel  Israel
1927/1986 Informal 11,738,000
Jordanian dinar  Jordan
 Palestine (West Bank only)
Informal 8,922,000
Russian ruble  Abkhazia
 South Ossetia
2008 Informal 142,177,000
South African rand Multilateral Monetary Area  Lesotho
 South Africa
1974 Formal
de facto customs and monetary union for SACU members
52,924,669 316,936,000,000
Swiss franc  Liechtenstein
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 Ecuador
 El Salvador
 Marshall Islands
 Federated States of Micronesia
 Turks and Caicos Islands
 British Virgin Islands
Netherlands BES islands
(Panama only)
Informal 339,300,000


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.[5]


Community Currency Region Target date Notes
Bolivarian Alternative for the Americas SUCRE Latin America
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[6][7] Oman and the United Arab Emirates do not intend to adopt the currency at first but will do at a later date.


Never materialised

  • 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


Further reading

  • Acocella, N. and Di Bartolomeo, G. and Tirelli, P. [2007], ‘Monetary conservatism and fiscal coordination in a monetary union’, in: ‘Economics Letters’, 94(1): 56-63.

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
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