Financial Integration in North America and in Europe Among Neighboring Countries at Different Stages of Development.

A low-credibility currency such as the Mexican peso or the Polish zloty that is overshadowed by a hard, international currency in a neighboring country cannot remain competitive in an integrating region. The devices used to protect the banking and financial business conducted in such currencies are costly to the economies involved. They create strong exposure to crises that start in the international capital and exchange markets and spread to the domestic banking system and thence to the entire economy.