Regional Monetary Integration

In This Review

Regional Monetary Integration

By Peter B. Kenen and Ellen E. Meade
Cambridge University Press, 2007
248 pp. $80.00
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The successful launch of the euro has sparked interest in regional currency unions elsewhere. This short book usefully reviews the theoretical case for such unions, the history of currency unions, the other extant currency unions (there are three in sub-Saharan Africa and one in the Caribbean), and official aspirations for a currency union among Arab countries around the Persian Gulf, among the countries of Southeast Asia, among selected South American countries, and (venturing into private proposals, most of which have been suggested by Canadians) among the three countries of North America. The authors argue that the economic relations among these various groupings are very different from those of the European countries and that such currency unions are accordingly not likely to be realized soon, if at all. They also discuss alternatives to currency unions, such as several countries collectively pegging their exchange rates to a basket of currencies or outright adoption of another country's currency ("dollarization" is the most common form). Although there are some risks, they conclude, the U.S. dollar is likely to remain the leading international currency for years to come, despite the creation of the euro.