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: A currency union or monetary union is distinguished from a full-fledged economic and monetary union, in that they involve the sharing of a common currency but without further integration between participating countries. Further integration may include the adoption of a single market in order to facilitate cross-border trade, which entails the elimination of physical and fiscal barriers between countries to free the movement of capital, labor, goods, and services in order to strengthen overall economies. Current examples of currency unions include the Euro and the CFA Franc, among others. Another way countries unite their currency is by use of a peg. Countries commonly peg their money to the currencies of others — typically to the U.S. dollar, the euro, or sometimes the price of gold. Currency pegs create stability between trading partners and can remain in place for decades. The Hong Kong dollar has been pegged at a rate of HK$7.8 to the U.S. dollar since 1983. 3 ﻿ The Bahamian dollar has been pegged at parity with the greenback since 1973. 4 ﻿
In addition to a peg, some countries actually adopt a foreign currency. For example, the U.S. dollar is the official currency in El Salvador and Ecuador, along with the Caribbean island nations of Bonaire, Sint Eustatius and Saba.