monetary union

A monetary union is when two or more countries agree to use the same currency and coordinate their monetary policies, such as interest rates and money supply, to stabilize the economy across borders. This integration reduces transaction costs, promotes price transparency, and encourages trade and investment among member countries. The most well-known example is the Eurozone, where countries share the euro as their official currency. However, it also means member countries give up some control over their individual monetary policies to a central authority, which manages the common currency for the entire union.