What's the difference between a monetary union and an economic union?

A monetary union involves shared currency among countries, while an economic union includes shared policies on economic issues.

A monetary union is a type of economic agreement where two or more countries use the same currency. The most well-known example of this is the Eurozone, where 19 of the 27 European Union member states have adopted the Euro as their official currency. The primary purpose of a monetary union is to facilitate trade and economic integration by eliminating currency exchange costs and exchange rate risks. However, it also means that member countries lose control over their monetary policy, as decisions about interest rates and money supply are made by a central authority, such as the European Central Bank in the case of the Eurozone.

On the other hand, an economic union is a more comprehensive form of economic integration that involves not only a common market for goods, services, and factors of production but also a harmonisation of economic policies among member countries. This includes policies related to trade, agriculture, fisheries, and regional development, among others. The aim is to reduce or eliminate barriers to trade and to coordinate economic policies to promote economic growth and stability. The European Union is an example of an economic union.

While a monetary union can be part of an economic union, as is the case with the Eurozone within the European Union, it is not a requirement. Some economic unions do not have a shared currency. For instance, the Southern African Development Community (SADC) is an economic union that does not have a common currency.

In summary, while both monetary and economic unions are forms of economic integration aimed at promoting trade and economic growth, they differ in their scope and the degree of policy coordination required. A monetary union focuses on currency integration, while an economic union involves a broader range of economic policy integration.