Currency union

Part of a series on
World trade
Policy Import Export Balance of trade Trade law Trade pact Trade bloc Trade creation Trade diversion Export orientation Import substitution Trade finance Trade facilitation Trade route Domestic trade Tax
Restrictions Trade barriers Tariffs Non-tariff barriers Import quotas Tariff-rate quotas Import licenses Customs duties Export subsidies Technical barriers Bribery Exchange rate controls Embargo Safeguards Countervailing duties Anti-dumping duties Voluntary export restraints
History Mercantilism Protectionism Laissez-faire Free trade Economic nationalism Economic integration
Organizations International Monetary Fund International Trade Centre World Trade Organization World Customs Organization International Chamber of Commerce
Economic integration Preferential trading area Free-trade area Currency union Customs union Single market Economic union Fiscal union Customs and monetary union Economic and monetary union
Issues Intellectual property rights Smuggling Competition policy Government procurement Outsourcing Globalization Fair trade Trade justice Emissions trading Trade sanctions War Currency war Trade costs Trade war Trade and development
Lists Imports Exports Tariffs Largest consumer markets Leading trade partners
By country Trade mission Trading nation United States Argentina Pakistan Romania Vietnam India
Theory Comparative advantage Competitive advantage Heckscher–Ohlin model New trade theory Economic geography Intra-industry trade Gravity model of trade Ricardian trade theories Balassa–Samuelson effect Linder hypothesis Leontief paradox Lerner symmetry theorem Terms of trade
v t e

A currency union (also known as monetary union) is an intergovernmental agreement that involves two or more states sharing the same currency. These states may not necessarily have any further integration (such as an economic and monetary union, which would have, in addition, a customs union and a single market).

There are three types of currency unions:

• Informal – unilateral adoption of a foreign currency.^[1]
• Formal – adoption of foreign currency by virtue of bilateral or multilateral agreement with the monetary authority, sometimes supplemented by issue of local currency in currency peg regime.
• Formal with common policy – establishment by multiple countries of a common monetary policy and monetary 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.^[2]