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What is a currency union?

In Business and Currency by Continental StaffLeave a Comment

A currency union is formed when two or more countries (or territories) agree to use the same currency. In this article, we’ll focus on those created around a ‘neutral’ currency – meaning one that doesn’t belong to or share the name of a single country (think euro). These unions covered below are also classified as ‘formal with a common policy’.

Euro (EUR)

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The euro is used by 19 of the 28 European Union members and is the official currency of the eurozone. There are also 9 users by way of monetary agreement, 2 by unilateral adoption, and 2 more partial uses (whew!). We’ll focus on the 19 eurozone members:

  • Austria
  • Belgium
  • Cyprus
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Ireland
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Portugal
  • Slovakia
  • Slovenia
  • Spain

The euro is the second most common reserve currency in the world, next to only the US dollar. It comes in denominations of 1¢, 2¢, 5¢, 10¢, 20¢, 50¢, €1, €2 coins, and €5, €10, €20, €50, €100, €200, and €500 notes. Each coin has the same map of Europe on the obverse side. The reverse side is unique to each country. The national sides vary, but usually include a picture of a monarch, national monument, or landmark. The notes are made from cotton fibres and therefore, have a very unique and distinctive feel compared to most other currencies. Each note depicts a picture of a fictional bridge which represents a period in architectural history in Europe. Each note represents a different period. For example, the €20 note is Gothic architecture.

The euro and the European Union were founded in 1992 with the signing of the Maastricht Treaty. However, the euro didn’t get its name until 1997 and wasn’t circulated until 2002. To many Europeans, the euro is much more than just a currency – it is a symbol of unity. More than any other continent, Europe was devastated by war in the 20th century with tens of millions of European deaths and entire cities razed in World War One and Two. The European Union and the euro are symbols of integration and unity among European countries that represent peace and hope for the future.

Learn more about the euro.

Eastern Caribbean Dollar (XCD)

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The Eastern Caribbean dollar made its world debut in the 1960s and is now used by 8 East Caribbean states. These are:

  • Antigua and Barbuda
  • Dominica
  • Grenada
  • Saint Kitts and Nevis
  • Saint Lucia
  • Saint Vincent and the Grenadines
  • Anguilla
  • Montserrat

EC$ come in denominations of 5¢, 10¢, 25¢, $1, and $2 coins and $5, $10, $50, $100 notes. Each coin features a picture of Queen Elizabeth Ⅱ on one side and a two-branch wreath, the words “Eastern Caribbean States”, along with the value and year of minting on the reverse side. All of the notes feature a picture of Queen Elizabeth Ⅱ, a turtle, and a green-throated Carib on one side while the reverse side varies. The $20 bill, for example, features a picture of nutmeg, Montserrat, and Government House.

Learn more about the Eastern Caribbean dollar.

CFA part 1 – Central African CFA Franc (XAF)

central african cfa franc africa money banknote

The Central African CFA franc is the official currency of 6 independent states in Central Africa. The six states combined make for about 48 million people using this currency in:

  • Cameroon
  • Central African Republic
  • Chad
  • Republic of the Congo
  • Equatorial Guinea
  • Gabon

You can get it in denominations of 1, 2 5, 10, 25, 50, 100, and 500-franc coins, and 500, 1000, 2000, 5000, and 10,000-franc notes. The notes are issued centrally with a letter to indicate which country they came from. Both sides of each note are unique across the board. For example, the 500 franc note portrays a classroom on the one side and women and huts on the reverse while the 1000 note portrays coffee harvest and a man on one side with a raft on the reverse.

The CFA franc made its debut in 1945, replacing the French Equatorial African franc. The coins and notes have since gone through several stylistic changes. Coins weren’t introduced until 1948 with higher denominations not issued until 1961 and 1966. Notes weren’t issued centrally until 1993 with second variations issued in 2002. The CFA is a fairly new currency on the world stage and just goes to show that practice makes perfect! The stylistic changes and evolution has resulted in a dynamic and interesting currency.

Learn more about the Central African CFA franc.

CFA part 2 – West African CFA Franc (XOF)

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The West African CFA franc is the official currency of 8 independent states in West Africa. The combined population of these states is over 105.7 million West African Franc users. These states are:

  • Benin
  • Burkina Faso
  • Guinea-Bissau
  • Ivory Coast
  • Mali
  • Niger
  • Senegal
  • Togo

West African francs are made in denominations 1, 2, 5, 10, 25, 50, 100, 200, and 500-franc coins made from a variety of metals specific to each coin. For example, the 1 and 2-franc coins are made from aluminum while the 100-franc coin is made from nickel. The banknotes are produced in denominations of 5, 10, 25, 50, 100, 500, 1,000, 2,500, and 5,000-franc notes. Like the Central African franc notes, the notes are all different on both sides. However, the West African franc has a little more consistency than the Central African variant. The obverse side of every note portrays a catfish-shaped brass weight belonging to the Ashanti people which was used for weighing gold dust, plus a different theme for every note. Some examples include transportation, agriculture, or education. There is an animal portrayed on the reverse side, like a camel on the 1000-franc note or antelopes on the 5000-franc note.

As mentioned earlier, the CFA replaced the French Equatorial African franc in 1945. Both the Central African franc and West African franc compose CFA – two halves of the same coin (pun intended)!

CFP Franc (XPF)

CFP franc french territories money tahiti

The CFP (Pacific Franc Exchange) is the official currency of the French overseas collectives. These are:

  • French Polynesia
  • New Caledonia
  • Wallis and Futuna

CFP are distributed in denominations of 1, 2, 5, 20, 50, and 100- franc coins and 500, 1,000, 5,000, and 10,000-franc notes. Each CFP coin has an identical obverse side with unique reverse sides that are different in each country. The banknotes have had the same design since 1969 with feature historical figures or landscapes of New Caledonia and historical figures or landscapes of French Polynesia on the reverse side.

The CFP franc was created alongside the CFA franc in 1945 as a response to the weakness of the French franc after World War Two. Since the French franc was devalued, the new currencies were created for the colonies to spare them the same devaluation and poverty.

Learn more about the CFP franc.

Explore the currencies for over 100 different countries. You can also check out which currencies you could find at a Continental branch.

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