Regional integration affects currency relationships from "summary" of International Money and Finance by Michael Melvin
Regional integration has a significant impact on currency relationships. When countries come together to form regional blocs, they often seek to deepen economic ties through trade agreements, common policies, and shared institutions. This increased integration can lead to greater coordination of monetary and fiscal policies among member countries, which in turn can affect the value of their currencies.
One way regional integration affects currency relationships is through the establishment of a common currency. For example, the Eurozone countries share the euro as their common currency. This arrangement eliminates exchange rate fluctuations between member countries, as they all use the same currency. However, it also means that individual countries lose control over their monetar...
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