[3] There needs to be enough convergence across states such that they largely face common shocks, and so a single monetary policy is broadly appropriate for all members. However, effective insurance mechanisms also need to be in place – based on diversification across the currency union – so that states can still stabilise their economies when their local cycles diverge.
They relied on each other to spread their currencies across the globe. They relied on their currencies to improve their welfare and wellbeing. That interdependence still persists in our financial system today: we need strong, stable and sustainable finances to ensure and support welfare and wellbeing. This is a balancing act that requires all of us to weigh in.