This is the case where the members in the union are affected differently by the same exogenous event. Such a situation creates a major challenge for the regional central bank, which must devise a single monetary policy for the entire region.
Without the ability to use the exchange rate or an independent monetary policy, fiscal adjustment becomes the main policy instrument and since some developing countries have limited fiscal space, they are at the mercy of resource transfers from the stronger member countries. Fourth, the establishment of a regional central bank robs national economies of revenues from seignorage, which could be sizable in fiscal terms.