IB International Economics HL Practice Exam 2025 – Your Comprehensive Guide to Mastering Higher Level Economics!

A key feature of members in a monetary union is that they establish a common central bank. This central bank is responsible for managing the shared currency and ensuring monetary stability among the member countries. By having a central authority that oversees monetary policy, the member countries can coordinate their economic policies, leading to increased stability and reduced risks of currency fluctuations that could arise from separate currencies.

In contrast, adopting different currencies would undermine the very premise of a monetary union, as it would prevent the members from integrating their economic policies effectively. Eliminating tariffs on goods pertains to a customs union, which is a different economic arrangement focused on trade rather than currency. Lastly, having independent monetary policies is inconsistent with the concept of a monetary union, where members typically relinquish individual control over monetary policy to the common central bank. Thus, the establishment of a common central bank is fundamental to the functioning and purpose of a monetary union.