monetary agreement, attempt by two (bilateral) or more (multilateral) nations to regulate and coordinate their financial relations by treaty. The objectives are usually to promote trade by facilitating payment of international debts and to maintain in each nation a stable exchange rate by making available credits to meet temporary difficulties with balance of payments. After World War II there was a significant movement toward multilateral monetary agreements, of which the most important were the International Monetary Fund and the European Payments Union (1950). Customs unions such as the European Community (EC) and the European Free Trade Association often require a large degree of monetary cooperation, and the increasing European integration that has transformed the EC into the European Union (EU) has also led to increasing monetary cooperation through the European Monetary System. In 1999 most EU nations adopted a single currency, the euro, which replaced the currencies of 12 member states in 2002.

European Monetary Agreement (EMA), international governmental organization to facilitate settlement of balance of payments accounts between member states. The EMA, which was administered by the Organization for Economic Cooperation and Development (OECD), existed from 1958 until 1972, replacing the European Payments Union. The EMA provided for the convertibility of the currencies of member states; that meant that the currency of one state could be exchanged directly for the currency of any other member state by nonresidents. In view of the facilities available for balance of payments assistance in the International Monetary Fund, the OECD announced (1972) that the EMA would, therefore, be terminated.