A currency union (also known as monetary union) involves two or more states sharing the same currency without them 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:
- Informal – unilateral adoption of foreign currency
- 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
- 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.
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 was until 2016 official tender. .
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.
Disbandedbetween Bahrain and Abu Dhabi using the Bahraini dinar
between Bahrain, Kuwait, Oman, Qatar and the Trucial States, using the Gulf rupee from 1959 until 1966
between Aden and South Arabia, Bahrain, Kenya, Kuwait, Oman, Qatar, British Somaliland, the Trucial States, Uganda, Zanzibar and British India (later independent India) using the Indian rupee
between British India and the Straits Settlements (1837–1867) using the Indian rupee
between Czech Republic and Slovakia (briefly from January 1, 1993 to February 8, 1993) using the Czechoslovak koruna
between Ethiopia and Eritrea using the Ethiopian birr
between France, Monaco, and Andorra using the French franc
between the Eastern Caribbean, Jamaica, Barbados, Trinidad and Tobago and British Guiana using the British West Indies dollar
between the Eastern Caribbean, Barbados, Trinidad and Tobago and British Guiana using the Eastern Caribbean dollar
between Italy, Vatican City, and San Marino using the Italian lira
between Jamaica and the Cayman Islands using the Jamaican pound and later Jamaican dollar
between Kenya, Uganda and Zanzibar using the East African rupee
between Kenya, Uganda and Zanzibar (and later Tanganyika) using the East African florin
between Kenya, Tanganyika and Zanzibar (later merged as Tanzania), Uganda, South Arabia, British Somaliland and Italian Somaliland using the East African shilling
Latin Monetary Union (1865–1927), initially between France, Belgium, Italy and Switzerland, and later involving Greece, Romania, Spain and other countries.
between Liberia and the United States using the United States dollar
between Mauritius and Seychelles using the Mauritian rupee
between Nigeria, the Gambia, Sierra Leone, the Gold Coast and Liberia using the British West African pound
between Prussia and the North German states (1838–1857) using the North German thaler
between Russia and the former Soviet republics (1991–1993) using the Soviet ruble
between Qatar and all the emirates of the UAE, except Abu Dhabi using the Qatari and Dubai riyal
between Saudi Arabia and Qatar using the Saudi riyal
between Samoa and New Zealand using the New Zealand pound
Scandinavian Monetary Union (1870s until 1924), between Denmark, Norway and Sweden
between the Solomon Islands, Papua New Guinea and Australia using the Australian dollar
South German guilder
between Spain and Andorra using the Spanish peseta
between Trinidad and Tobago and Grenada using the Trinidad and Tobago dollar
between Brunei, Malaysia, and Singapore (1953–1967) using the Malaya and British Borneo dollar
between Cambodia, Laos, and Vietnam (1885–1952) using the French Indochinese piastre
between South Africa and Botswana (1966–1976) using the South African rand
between Egypt and Sudan using the Egyptian pound – until 1956
between West Germany and East Germany between 1 July 1990 and 3 October 1990, as part of a temporary, so-called "Monetary, Economic and Social Union" prior to German reunification.
between Republic of Ireland and United Kingdom between 1928 and 1979 using the Irish Pound.
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