This expositive textbook on monetary integration looks at the costs and benefits of monetary union in Europe. The author examines such topical issues as whether there is a good economic case for countries to have separate currencies, and whether a nation increases its welfare when it abolishes its national currency and adopts the currency of a wider area. This leads naturally to questions concerning the size of an optimal monetary area - should this include the EC, the whole of Europe, or the whole world? The first part of the book focuses on complete monetary unions in which a common currency is substituted for national currencies. The second part looks at incomplete monetary unions and analyzes the operation of monetary systems in which national monetary authorities maintain their national currencies but agree to fix their exchange rates. This leads to an analysis of the European Monetary System and also examines the issues relating to the transition to a full monetary system. The book combines comprehensive exposition with discussion of recent historical events and theory and will prove invaluable to students.