A monetary union is an economic agreement where member countries share a single currency and a central authority manages their money supply and interest rates.

Key features:

• Members use the same common currency (such as the Euro).
• A shared central bank makes decisions for everyone.
• Countries cannot manage their own money supply or change their exchange rates independently.
• The main goal is usually to keep prices stable across all member nations.

Benefits:

• Removes the risk of changing exchange rates, which helps trade and business.
• Makes it cheaper to buy and sell goods across borders.
• Prevents big movements in currency values caused by speculation.

Costs:

• Countries lose control over their own monetary policy, meaning they cannot easily fix local economic problems.
• One policy might help some countries but not others.
• Requires strict rules to ensure no country spends too much money and creates debt.

Example: The Eurozone, where many European countries use the Euro as their official money.