The Common Currency Area and the European Monetary Union

Abstract

The common currency area is one of the highest forms of economic integration in some countries, a good example of which would be the Euro area. A common currency area is that geographical area where the use of a single currency can bring benefits . Likewise, the nations that make up the monetary union also coordinate their economic policies. It means that they follow common rules for their fiscal deficit.

Although all EU member states have the right to join if they meet certain monetary obligations, not all EU members have adopted the new currency. All the countries that have joined the EU since the implementation of the Maastricht Treaty have said that they will adopt the euro in due time. Maastricht forced current members to adapt to the euro; however, Great Britain and Denmark exempted themselves from this obligation. Sweden rejected the euro in a referendum in 2003 , and has avoided the obligation to join by not meeting the conditions. In addition, the four European Microstates (Vatican, Monaco, Andorra , and San Marino ), although not members of the EU, have adapted the euro due to currency ties with member countries. Two other European countries, Montenegro and Kosovo, have adopted the euro unilaterally, although these are also not members.