Currency area
The currency area (or currency area ) is the geographic territory of a currency in which this currency is recognized as legal tender .
General
The currency area can be a nation state for purely national currencies (for example the baht in Thailand ) or a union of states for currency unions (such as the euro or the CFA franc BCEAO ). Regions in the case of regional money or the area of application of a coin association (for example the Rheinischer Münzverein ) are not a legally recognized currency area. The scope of a currency is precisely defined by law within the framework of currency sovereignty and is always within national borders .
Outside the scope, however, a foreign currency can actually be recognized as a means of payment ( anchor currency ), although a separate currency exists. The US dollar , for example, outside the United States in many developing countries accepted as payment. There are also cases where an anchor currency replaces a missing national currency: since Kosovo and Montenegro unilaterally introduced the euro in January 2002, it has been the de facto national currency there, even though both countries do not belong to the EU . This means that although the euro is not legal tender there, the population treats it that way.
Economics
The precise geographical definition of the area of validity leads in particular to the fact that it is clear whether payments are made with the official domestic currency or with foreign exchange for which there is usually no obligation to accept . If someone in Thailand pays with US dollars, the creditor does not have to accept this foreign currency; if he does so, there is a payment in foreign currency. A currency area is therefore also characterized by the fact that there are no exchange rates and no exchange rate risks when using the official currency, because the nominal value applies .
The currency area is the object of knowledge of the theory of optimal currency areas , which deals with the question of the optimal size of a currency area. Scientific proposals range from several currencies within a nation state to a world currency (such as the Terra ). In the specialist literature there is broad consensus that the European Monetary Union is not an optimal currency area in the sense of the theory of optimal currency areas.
development
In the last few decades, two opposing tendencies in the development of the number of currency areas were discernible:
- In several regions of the world there were currency unions (in addition to the euro and CFA, for example the Eastern Caribbean currency union ) or such efforts were at least pursued (such as the Asian currency unit (ACU) ).
- A number of common currency areas broke up because a state was divided into several states (e.g. the Soviet ruble or the Czechoslovak krona ).
In general, however, there is a noticeable trend towards larger currency areas. There is no exchange rate uncertainty in these ; this eliminates those transaction costs that are caused by different currencies.
Individual evidence
- ↑ ECB, The Euro Outside Europe , March 2017
- ↑ Lena Ketterer, approval requirement for the European Stability Mechanism , 2016, p. 21