By John F Chown
EMU might be trumpeted because the nice financial scan in financial union, yet as John Chown indicates during this exceptional e-book, there were many different examples of financial unions through the years - a few winning, others now not so. during this complete old evaluation, the writer writes approximately financial unions with an admirable completeness and covers such topics as: the superior, financial unions in international locations and components from Latin the United States to The British Empire to Japan and Korea with many in among, the EMU and its coverage ramifications and the CFA Franc quarter within the former French colonies.
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15 The first currency boards were set up precisely to avoid this problem. g. because of a local recession following a bad cocoa harvest) could have an adverse effect on the UK monetary system. The West African Currency Board was therefore set up in 1912 to issue coins and notes which would only circulate locally. In 1997 the then new Bosnia Currency Board was described as ‘de-dollarisation’. 5 Monetary unions Introduction There are plenty of examples of countries choosing to adopt the currency of another, but true monetary unions between otherwise independent sovereign states are rare.
14 In an inflationary economy the economics are far more complicated and the crucial issue, famously identified by Philip Cagan in his analysis of hyper-inflation, is that a government can always extract some extra seigniorage in the short term by inflation, although at the cost of making its currency less attractive and thus reducing its future seigniorage revenues. When a country has suffered hyper-inflation and lacks a proper monetary base there is an opportunity, in effect, for creating a new interest-free loan equal to the amount of currency needed.
There was no excessive issue of paper money, convertibility was eventually resumed with the pound at its old gold parity, and the gold standard was formalised. These differences were the driving force of monetary developments in Europe, with major and unexpected repercussions in the ‘silver standard’ countries of the Far East and Latin America. Bimetallism at that time did really seem to be a convenient arrangement, and only became an emotional issue later in the century. Another important distinction, overlooked by most contemporary commentators, was that the United Kingdom, unlike the French where the idea had become discredited, following experience with the assignats and the earlier machinations of John Law, made extensive use of paper money and of bank deposits.