Monetary and financial integration: evidence from the EMU.

From: FRBSF Economic Letter | Date: August 6, 2004| Author: Spiegel, Mark M. | Copyright information

Most economists would argue that monetary integration leads to financial integration; in other words, when a set of countries has a common currency, as in the European Monetary Union (EMU), for example, those countries also would tend to have more extensive international financial activity. Two main reasons are generally cited. First, monetary integration reduces "currency risk," which is the risk that the value of debt obligations would change due to fluctuations in currency value...

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