In the decade between 1847 and 1857, twenty five private banks were
established there for the express purpose of printing banknotes to
circulate as legal tender. Seventy (!) different types of currency
(mostly foreign) were being used in the Rhineland alone in 1816.
The Federal Reserve System was founded only following a tidal wave of
banking crises in 1908. Not until 1960 did it gain a full monopoly of
nation-wide money printing. The monetary union in the USA - the US
dollar as a single legal tender printed exclusively by a central
monetary authority - is, therefore, a fairly recent thing, not much
older than the euro.
It is common to confuse the logistics of a monetary union with its
underpinnings. European bigwigs gloated over the smooth introduction of
the physical notes and coins of their new currency. But having a single
currency with free and guaranteed convertibility is only the
manifestation of a monetary union - not one of its economic pillars.
History teaches us that for a monetary union to succeed, the exchange
rate of the single currency must be realistic (for instance, reflect
the purchasing power parity) and, thus, not susceptible to speculative
attacks. Additionally, the members of the union must adhere to one
monetary policy.
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