A while ago I asked how countries make a currency and give it value, specifically pointing out that I wasn't concerned about when/why such a thing would be done.

Well, now I'm asking the exact opposite. Ignoring how a country would do so, when/why would a country implement a new currency? What are the pros and cons of doing it? And are there differences between large economies and small economies when it comes to this?

  • 2
    $\begingroup$ Let's flip the question around. why wouldn't a country want to issue their own currency? Using someone else's currency means that you are subject to their policy decisions whether you like them or not. $\endgroup$
    – zeta-band
    May 29 '18 at 21:47
  • 1
    $\begingroup$ Why would a country not want to be in control of their own monetary policy? $\endgroup$
    – EconJohn
    May 30 '18 at 4:25
  • $\begingroup$ Ya, I get that at a high level. The problem is that I'm a noob who doesn't understand the details of what "monetary policy" entails. Thus I ask. :) $\endgroup$
    – Tirous
    May 30 '18 at 5:20
  • $\begingroup$ Also, if having your own currency is such a "duh", why is the Euro a thing? $\endgroup$
    – Tirous
    May 30 '18 at 5:25
  • $\begingroup$ @Tirous The expectation on the Euro was that the reduction in costs and problems given by using one currency was more valuable than the loss of monetary policy flexibility. But as Greece and Spain have shown, the loss of monetary policy control is extremely painful. If Greece was still on the Drachma, they would devalue it to increase exports and decrease imports. But they can't do that, so they have to repay loans in Euros. $\endgroup$
    – zeta-band
    May 31 '18 at 18:49

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