Currency union

History

The first currency unions were established in the 19th century. The German Zollverein came into existence in 1834, and by 1866, it included most of the German states. The fragmented states of the German Confederation agreed on common policies to increase trade and political unity.

The Latin Monetary Union, comprising France, Belgium, Italy, Switzerland, and Greece, existed between 1865 and 1927, with coinage made of gold and silver. Coins of each country were legal tender and freely interchangeable across the area. The union's success made other states join informally.

The Scandinavian Monetary Union, comprising Sweden, Denmark, and Norway, existed between 1873 and 1905 and used a currency based on gold. The system was dissolved by Sweden in 1924.

A currency union among the British colonies and protectorates in Southeast Asia, namely the Federation of Malaya, North Borneo, Sarawak, Singapore and Brunei was established in 1952. The Malaya and British Borneo dollar, the common currency for circulation was issued by the Board of Commissioners of Currency, Malaya and British Borneo from 1953 until 1967. Following the cessation of the common currency arrangement, Malaysia (the combination of Federation of Malaya, North Borneo, Sarawak), Singapore and Brunei began issuing their own currencies. Contemporarily, a currency reunion of these countries might still be feasible based on the findings of economic convergence.

List of currency unions

Existing

Note: Every customs and monetary union and economic and monetary union also has a currency union.

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 was, until 2016, official tender.

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.

Currency union in Europe

The European currency union is a part of the Economic and Monetary Union of the European Union (EMU). EMU was formed during the second half of the 20th century after historic agreements, such as Treaty of Paris (1951), Maastricht Treaty (1992). In 2002, the euro, a single European currency, was adopted by 12 member states. Currently, the Eurozone has 21 member states. The other members of the European Union are required to adopt the euro as their currency (except for Denmark, which has been given the right to opt out), but there has not been a specific date set. The main independent institution responsible for stability of the euro is the European Central Bank (ECB). The Eurosystem groups together the ECB and the national central banks (NCBs) of the Member States whose currency is the euro. The European System of Central Banks (ESCB) is made up of the ECB and the national central banks of all Member States of the European Union (EU), regardless of whether or not they have adopted the euro. The Governing Board consists of the executive committee of the ECB and the governors of individual national banks, and determines the monetary policy, as well as short-term monetary objectives, key interest rates and the extent of monetary reserves.

Planned

Disbanded

• 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, South Arabia, Bahrain, Kenya, Kuwait, Oman, Qatar, British Somaliland, the Trucial States, Uganda, Zanzibar and British India (later independent India) using the Indian rupee until 1974
• between Belgium and the Grand-Duchy of Luxemburg (Belgium-Luxembourg Economic Union) using the Belgian/Luxembourgish franc from 1921 to the Euro
• 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 Austria-Hungary and Liechtenstein using the Austro-Hungarian krone
• between the Eastern Caribbean, Jamaica, Barbados, Trinidad and Tobago and British Guiana using the British West Indies dollar
• 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 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, Romania, 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 Armenia and Artsakh using the Armenian dram
• between Qatar and all the emirates of the United Arab Emirates, except Abu Dhabi using the Qatari and Dubai riyal
• between Saudi Arabia and Qatar using the Saudi riyal
• between Western Samoa and New Zealand using the New Zealand pound
• Scandinavian Monetary Union (1870s until 1924), between Denmark, Norway and Sweden
• between the Solomon Islands, Papua New Guinea and Australia using the Australian dollar
• between Australia, Papua, New Guinea, Nauru, the Solomon Islands, and the Gilbert and Ellice Islands using the Australian pound
• between Bavaria, Baden, Württemberg, Frankfurt, and Hohenzollern using the South German guilder
• between Spain and Andorra using the Spanish peseta
• between Trinidad and Tobago and Grenada using the Trinidad and Tobago dollar
• between Brunei, Malaysia, and Singapore (1953–1967) using the Malaya and British Borneo dollar
• between Cambodia, Laos, Guangzhouwan, Annam, Tonkin, and Cochinchina (later Vietnam) between 1885 and 1952 using the French Indochinese piastre
• between South Africa, South West Africa, and Bechuanaland (later independent Botswana) using the South African rand
• between Egypt, Anglo-Egyptian Sudan, and Mandatory Palestine (until 1926) using the Egyptian pound
• between West Germany and East Germany between 1 July 1990 and 3 October 1990, as part of a temporary, so-called "Monetary, Economic and Social Union" prior to German reunification.
• between what ultimately became the Republic of Ireland and the United Kingdom, between 1928 and 1979. The Irish Pound was held at exactly the same value as Sterling for this period, although it was not accepted for payments in the UK.
• Yen Bloc (between 1905 and 1945), between the Empire of Japan, the Korean Empire, Manchukuo, Mengjiang, the Wang Jingwei regime, and Japanese-occupied Southeast Asia prior to and during World War II.

Never materialized

• 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
• proposed gold-backed, pan-African monetary union put forward by Muammar Gaddafi prior to his death