Title: Currency Union
Headings: Currency Union
Currency Union
What Is a Currency Union?
Key Takeaways
What Causes Drastic Currency Changes?
Understanding Currency Unions
History of Currency Unions
Evolution of the European Currency Union
Criticism of the European Monetary System
Article Sources

Content: 8 ﻿ Other agreements reinforced European economic unity, such as the 1951 Treaty of Paris establishing the European Steel and Coal Community, which was later consolidated into the European Economic Community in 1957. However, the global economic hardships of the 1970s prevented further European economic integration until efforts were renewed in the late 1980s. 9 ﻿
The eventual formation of the European Economic and Monetary Union was made possible by the signing of the 1992 Maastricht Treaty. 10 ﻿ Thus, the European Central Bank was created in 1998, with fixed conversion and exchange rates established between member states. 11 ﻿
In 2002, twelve member states of the European Union adopted the euro as a single European currency. 2 ﻿ As of 2020, nineteen countries use the euro for their currency. 1 ﻿
Criticism of the European Monetary System
Under the European Monetary System, exchange rates can only be changed if both member countries and the European Commission agree. This unprecedented move attracted a lot of criticism. Significant problems in the foundational policies of European Monetary System became evident following the Great Recession . Certain member states — Greece, in particular, but also Ireland, Spain, Portugal, and Cyprus — experienced high national deficits that developed into a European sovereign debt crisis .