History of Currency Unions

In the past, countries have entered into currency unions to facilitate trade and strengthen their economies, and to also unify previously divided states. In the 19th century, Germany’s former customs union helped to unify the disparate states of the German Confederation with the aim of increasing trade. More states joined beginning in 1818, sparking a series of acts to standardize the value of coins transacted in the area. The system was a success and led to the political unification of Germany in 1871, followed by the creation of the Reichsbank in 1876 and the Reichsmark as the national currency.

In 1865, France spearheaded the Latin Monetary Union, which encompassed France, Belgium, Greece, Italy, and Switzerland. Gold and silver coins were standardized and made legal tender, and freely exchanged across borders to increase trade. The currency union was successful and other countries joined. However, it was formally disbanded in 1927 amid political and economic turmoil during the early part of the century. Other historical currency unions include the Scandinavian Monetary Union of the 1870s based on a common gold currency.

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