What Is A Monetary Agreement

(bilateral) or more (multilateral) countries seek to regulate and coordinate their financial relations through the 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 through the granting of credit in order to deal with temporary balance-of-payments difficulties. After the Second World War, there was a major movement towards multilateral currency agreements, the largest of which were the International Monetary Fund and the European Payments Union (1950). Community unions such as the European Community (EC) and the European Free Trade Association often require a high level of monetary cooperation, and the growing European integration that has transformed the EC into the European Union (EU) has also led to monetary cooperation strengthened by the European monetary system. In 1999, most EU Member States adopted a single currency, the euro, which replaced the currencies of 12 Member States in 2002; Other EU member states have adopted it in the meantime. Although after the economic and political integration implemented within the EMA, some countries have favoured an outright system of economic integration. [11] In the 1950s, after the creation of the EMA, these countries, including Denmark, the United Kingdom, Sweden, Finland and Austria, decided to create their own free trade zones. [14] These free trade zones have not focused on political integration, but only on achieving countries` economic objectives and policies. The European Free Trade Association (EFTA) is an example.

[16] The creation of free trade zones such as EFTA has highlighted differences of opinion among EMA member countries. [15] EFTA also explained how each country had different motivations for what it felt was necessary to achieve economic growth and economic development through integration. [14] [16] With the implementation of the EMA, this agreement should ultimately help Europe move towards a macroeconomic monetary union. [2] The EMA was a framework for advancing the work of the European Payments Union, which was responsible for cooperation on the exchange of goods and services between countries. [6] The EMA hoped to support the European Economic Community. It hoped to achieve this through a systemless exchange rate system, a single economic policy and an Union in which factors of production such as capital and, in particular, labour could be freely displaced. [2] There were several objectives to be achieved through the implementation of the European Monetary Agreement, but there was a main objective. The EMA`s objective was to reduce short-term loans, a form of credit obtained between Member States. [5] It was hoped that the changes made during the passage of payments to the EMA from the European Union would achieve this. The EMA was a short-term phase as part of a long-term plan for Europe`s economic integration.

[13] It has followed previous agreements, all created to stimulate growth and the development of the European economy.