Monetary union, in comparison to dollarization, means that:

Question

Quizplus · Accepted Answer

Monetary union involves multiple countries sharing a common currency and central bank, which means that they also share in monetary policy decisions. This is in contrast to dollarization, where a country adopts a foreign currency (such as the US dollar) as its own and gives up control over monetary policy. While countries in a monetary union may forego some revenues from seignorage (the difference between the cost of producing and the face value of currency), they still have a say in the policy decisions affecting their economy. Option C is also incorrect, as the central bank in a monetary union can still function as a lender of last resort. Therefore, option B is the best choice.

Monetary Union, in Comparison to Dollarization, Means That