Economics, 3rd Edition

common currency area

 is a geographical area throughout which a single currency 

circulates as the medium of exchange. Another term for a common currency area is a currency union, 

and a closely related phenomenon is a monetary union: a monetary union is, strictly speaking, a group 

of  countries that have adopted permanently and irrevocably fixed exchange rates among their various 

 currencies. Nevertheless, the terms common currency area, currency union and monetary union are often 

used more or less interchangeably, and in this chapter we’ll follow this practice.

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