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Currency Exchange EuroLast update: Saturday 19th of May 2012
This became a major problem for the Union and the coup de grace was delivered by the unprecedented financing needs brought on by the First World War. The LMU was officially dismantled in 1926 - but died long before that. The lesson: a common currency is not enough - a common monetary policy monitored and enforced by a common Central Bank is required in order to pre-empt inflationary pressures. This need arises precisely because these countries share a common currency. In other words, the effects of one member's fiscal decisions are communicated to other members (through the monetary policy) because they share one currency. The currency is the medium of exchange of information regarding the present and future health of the economies involved. Officially (and really) a gold standard developed throughout Europe and included coin issuers such as Germany and the United Kingdom). Still, in the Latin Monetary Union, the quantities of gold and silver to coins. But, this pledge meant that the Central Banks of the participating countries were forced to maintain a fixed ratio of exchange between
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