Exchange Rates and Economic and Monetary Union

Abstract

Must a country possess its own currency? Would a nation be less of a nation if it shared a currency with other neighbouring nations? Strong opinions are expressed regarding this issue throughout the countries of the European Union and the proposed Economic and Monetary Union, involving the creation of a single currency for member states. A whole host of motivations and values gives rise to these differing opinions. The purpose of this chapter, as elsewhere in this book, is to look at the appropriate economic theory and to consider how that may help to inform the debate.