What Is A Monetary Agreement

Monetary agreement between the EU and Vatican City State, an attempt by two or more (bilateral) nations to regulate and coordinate their financial relations by treaty. The objectives are generally to promote trade by facilitating the payment of international debt and to maintain a stable exchange rate in each country by granting loans to deal with temporary balance of payments difficulties. After the Second World War, there was a significant movement towards multilateral monetary agreements, the most important of which were the International Monetary Fund and the European Payments Union (1950). Customs unions such as the European Community (EC) and the European Free Trade Association often require a high level of monetary cooperation, and the increasing European integration that has transformed the EC into the European Union (EU) has also led to increased monetary cooperation through the European Monetary System. In 1999, most EU countries adopted a single currency, the euro, which replaced the currencies of 12 Member States in 2002; other EU countries have since adopted it. Finally, by implementing the EMA, this agreement should help Europe move towards a comprehensive monetary union. [2] The EMA was an established framework to advance the work of the European Payments Union, which was responsible for cooperation in the exchange of goods and services between countries. [16] The European Union is the current monetary union, which has a common currency, the euro, and which shows a high degree of cooperation and integration between Member States. [13] The EMA has contributed to this existence of a common currency and central bank.