Monetary integration has two essential characteristics: (1) exchange rates in the integrated area must bear a permanently fixed relationship to each other, although they may jointly vary with respect to other currencies; and (2) there must be full convertibility in the sense that there are no exchange controls on either current or capital transactions within the area. (Convertibility for traderelated transactions is indispensable for the effective functioning of a customs union; convertibility for capital transactions is a principal ingredient of capital market integration, which is itself an essential characteristic of a common market.) If these two characteristics are to be adequately guaranteed and to be truly immutable, two other requirements would also be essential.