UPSC Prelims 1997 · General Studies
Question 4: International Relations and Current Affairs
The economic and monetary union of 15 European Countries is proposed to be made by 1999. But the currencies of two countries, Franc, have already the same value and circulate freely in both the countries. The countries are
AnswerThe answer is (c).
Belgium and Luxembourg shared a monetary union from 1922. The Luxembourg franc was kept at par with the Belgian franc, and both circulated freely in either country. This union later joined with the Netherlands in Benelux. France and Switzerland each used their own franc, and the two were worth very different amounts. Remember the pair as Benelux's two francs.
Why each option is right or wrong
- (a) The French franc and the Swiss franc differed widely in value and did not circulate freely across the border.
- (b) Switzerland had its own Swiss franc; Luxembourg's franc was tied to Belgium's, not to Switzerland's.
- (c) Right: the Luxembourg and Belgian francs were at par and were used in both countries.
- (d) The French franc and the Belgian franc were separate currencies with floating rates between them.
Worth knowing: The Belgian, Luxembourg and French francs have all been replaced by the euro, so the pairing is now historical.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 1997, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.