Monetary Area

A monetary Area is formed of the countries

  • which have same the Devise (currency), for example the countries of the Euro area having accepted the euro like common and single currency ,
  • or whose local currency is attached to a currency of external reference by a Foreign exchange rate fixes (for example the Estonia has a fixed Parité between its currency and the euro).

There is thus at least makes of them two possible types of monetary areas. A intermediate system being that of the double money circulation where at the same time the local currency and the currency of reference are allowed in the internal transactions, or at least certain types of internal operation. The currency of reference is then common, but not single. Such a system can be only transitory, because it poses problems of stability with use, one of the two currencies tending to take the top (Loi of Gresham)

Monetary areas in the history

Monetary areas nowadays

In the current world, the the monetary areas (of influence) most known and important are

  • the Euro area and as regards the Euro
  • the Dollar area as regards the US Dollar.
  • a zone CFA franc, under the aegis of the France, which acts on the markets to maintain a parity more or less fixed of this currency compared to the Euro.

See too

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