Monetary Union
A set of countries that choose to use a common currency. One reason why countries form these systems is to lower the transaction costs of cross-border trade.
For example, the European Monetary System (EMS) was created in 1979 by eight European countries. This system consisted of mutually fixed exchange rates between these countries. In 2002, the European Monetary Union (EMU) was formed when 12 European countries agreed to a common monetary policy. By 2012, the EMU has expanded to include 17 European countries.
For example, the European Monetary System (EMS) was created in 1979 by eight European countries. This system consisted of mutually fixed exchange rates between these countries. In 2002, the European Monetary Union (EMU) was formed when 12 European countries agreed to a common monetary policy. By 2012, the EMU has expanded to include 17 European countries.