What’s the future for monetary unions?

At the beginning of this year Bulgaria, considered as one of the poorest countries in the European Union, became the latest to officially join the eurozone. Bulgaria’s legal tender since 1881 had been the lev, but since the mid-1990s it had been pegged to other European currencies, first to the German deutschmark and now to the euro. But it remains to be seen if the country’s economic policy can take advantage of the opportunities that joining the single currency can afford, in terms of trade and economic development.

Monetary unions are not a new concept, some like the Scandinavian monetary union date back to the 19th Century, involving Denmark, Sweden and Norway. It established a fixed exchange rate system based on the gold standard, whilst member countries still had their own currencies before it was gradually dissolved from the outbreak of World War One onwards.

Today, the biggest monetary union is the eurozone, used by around 358 million people across 21 European Union countries. It has one monetary authority for all the members and a standardised currency and coinage.

And now the Economic Community of West African States, known as ECOWAS is actively planning a monetary union with a common currency called the eco and pegged to the euro. The ambition is for greater economic sovereignty and regional economic integration.

But with the US dollar as the world’s dominant global reserve currency, even though it’s not part of a global monetary union, is there an argument for one currency across all borders and if so, what should it be?

So, on The Inquiry this week we’re asking, ‘What’s the future for monetary unions?’

Contributors:
Assoc Prof Ralitsa Simeonova-Ganeva, Sofia University St Kliment Ohridski, Bulgaria
Prof Barry Eichengreen, University of California, Berkeley, USA
Prof Mohamed Ben Omar Ndiaye, Cheikh Anta Diop University, Senegal
Dr Judy Shelton, Senior Fellow, The Independent Institute, California, USA

Presenter: Charmaine Cozier
Producers: Daniel Rosney and Jill Collins
Researcher: Evie Yabsley
Editor: Tom Bigwood
Technical producer: Toby James
Production management: Phoebe Lomas and Liam Morrey

(Photo: Euro and US dollar banknotes. Credit: BBC/Corbis Royalty Free)