A monetary union is a group of economies sharing the same currency. One central bank controls the currency, monetary policy and exchange rate policy for all the members.
In the European Monetary Union (EMU), the European Central Bank (ECB) controls monetary policy and exchange rate policy for euro members.
Each euro member has independent fiscal policy but there are rules over how large fiscal deficits can be. The rules of the stability and growth pact mean euro members’ fiscal deficit cannot exceed 3% of GDP and national debt cannot exceed 60% of GDP.