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Currency union

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Title: Currency union  
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Subject: Customs and monetary union, Economic and monetary union, Single market, Customs union, Economic integration
Collection: Currency, Currency Unions, Economic Integration, MacRoeconomics, Proposed Currencies
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Currency union

A currency union (also known as monetary union) involves two or more states sharing the same currency, though without their necessarily having any further integration (such as an economic and monetary union, which would have, in addition, a customs union and a single market).

Three types of currency unions exist:

  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 a 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 1
    • Existing 1.1
    • Planned 1.2
    • Disbanded 1.3
    • Never materialized 1.4
  • See also 2
  • References 3
  • Further reading 4
  • External links 5

List of currency unions


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
 Central African Republic
 Republic of the Congo
 Equatorial Guinea
1945 Formal, common policy 151,978,440
CFP franc Issued by the (French) Overseas Issuing Institute  French Polynesia
 New Caledonia
 Wallis and Futuna
1945 Formal, common policy 552,537
East Caribbean dollar 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 Eurozone:


and EU special territories:
Akrotiri and Dhekelia (SBAs)
 French Southern and Antarctic Lands
 Saint Barthélemy
 Saint Pierre and Miquelon

 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
Hong Kong dollar  Hong Kong


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


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


1966 Informal 22,557,000
Pound sterling Sterling area (former)  United Kingdom

and overseas territories:
 British Antarctic Territory
 British Indian Ocean Territory
 Falkland Islands
 Saint Helena, Ascension and Tristan da Cunha
 South Georgia and the South Sandwich Islands

and crown dependencies:
 Isle of Man

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  India


1974 Informal

Nepal minor usage

New Zealand dollar  New Zealand

and dependencies:
Ross Dependency

 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  Russia

 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

and insular areas:
 American Samoa
 United States Minor Outlying Islands
 Northern Mariana Islands
 Puerto Rico
 United States Virgin Islands

 El Salvador
 Marshall Islands
 Federated States of Micronesia
 Turks and Caicos Islands
 British Virgin Islands
BES islands


(Panama only)

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

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 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]


Community Currency Region Target date Notes
Bolivarian Alternative for the Americas SUCRE Latin America
? 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 ? a free trade agreements matrix partially established
Cooperation Council for the Arab States of the Gulf Khaleeji Arabian Peninsula 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.


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

See also


  1. ^ Anguilla and Montserrat are members of OECS currency union, but not of the CSME.
  2. ^ 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. ^
  9. ^ (Hungarian)
  10. ^ a b
  11. ^ Not currently on any political agenda, based mostly off conspiracy theories.

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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