Transactions costs include the spread between the buy and sell price, computed as the difference between the rate at which banks buy foreign currency and the rates they charge for sales of foreign currency. Other costs involve the commission charges for engaging in foreign exchange transactions.
The commission varies with the size of transactions, and there are usually different rates for various forms of foreign currency transfers. The gains from the elimination of transaction costs are a function of trade flows between members of a monetary union. With high volumes of trade, the gains are substantial.