4.4.9 (HL)—Monetary union evaluation

A monetary union is more resilient when members can absorb different shocks without changing their own exchange rate or interest rate. Evaluation should weigh lower transaction costs and deeper trade against the loss of independent stabilisation.

Ask whether labour can move, fiscal transfers are credible, banks are supervised consistently and economies are sufficiently aligned. A common currency can support integration, but it cannot by itself remove structural differences or guarantee convergence.