The paper discusses the backdrop and issues of a single currency regime in Europe. It presents the brief review of events leading to economic and monetary union in Europe. Then it discusses the issue of an optimum currency area in Europe. The paper also looks into the role of monetary policy in an economic and monetary union in Europe as well as the issue of fiscal policy in a European monetary union. Finally it looks at the international dimension of the euro as a potential rival of the U.S. dollar in the international financial markets.
