Monetary Union
Economic Integration
AO2
Syllabus requirement
Groups of countries sharing a common currency and central bank, such as the Eurozone.
Assessment objectives
AO2 Application and Analysis
Summary
Monetary union describes a stage of economic integration where members of a common market permanently fix exchange rates and typically adopt a single currency managed by a common central bank. It matters because it removes exchange-rate risk between members, requires convergence of monetary policy (so members lose independent interest-rate control), and can affect trade, investment, and transaction costs within the bloc.
