Definition Of Monetary Agreement

Finally, by implementing the EMA, this agreement should help Europe move towards a comprehensive monetary union. [2] The EMA was a framework put in place to advance the work of the European Payments Union, which is responsible for cooperation on the exchange of goods and services between countries. [6] The EMA hoped to support the European Economic Community. It hoped to achieve this through a stable exchange rate, a coherent economic policy and a Union where factors of production such as capital and, in particular, labour, were ready to move freely. [2] The most striking example of a monetary union at the turn of the twenty-first century was the creation of a single currency among most of the countries of the European Union (EU) – the euro. This example shows the interaction of economic and political factors in the creation of a monetary union. From an economic point of view, a monetary union helps to reduce transaction costs in an increasingly integrated regional market. It also contributes to increasing price transparency and thus increasing intra-regional competition and market efficiency. In addition, a monetary union was seen as an essential step towards further political integration of the EU. The EMA had short-term repercussions, but also played a role in the definitive creation of the European Union. [16] The European Union is the current monetary union, with a single currency, the euro, with a high degree of cooperation and integration between Member States. [13] The EMA has contributed to the existence of a single currency and a central bank.

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