The Euro feels like a novelty - but it is not. It was preceded by quite a few Monetary Unions in Europe and outside it.

To start with, countries such as the USA and the USSR are (or were in the latter's case) monetary unions. A single currency was or is used over enormous land masses incorporating previously distinct political, social and economic entities. The American constitution, for instance, did not provide for the existence of a central bank. Founding fathers, the likes of Madison and Jefferson, objected to its existence. A central monetary institution was established only in 1791 (modelled after the Bank of England). But Madison (as President) let its concession expire in 1811. It was revived in 1816 - only to die again. It took a civil war to lead to a budding monetary union. Bank regulation and supervision were instituted only in 1863 and a distinction was made between national and state-level banks.

By that time, 1562 private banks were printing and issuing notes, some of them not a legal tender. In 1800 there were only 25. The same thing happened in the principalities which were later to constitute Germany: 25 private banks were established only between 1847 and 1857 with the express intention of printing banknotes to circulate as legal tender. In 1816 - 70 different types of currency (mostly foreign) were being used in the Rhineland alone.

A tidal wave of banking crises in 1908 led to the formation of the Federal Reserve System and 52 years were to elapse until the full monopoly of money issuance was retained by it.

What is a monetary union? Is it sufficient to have a single currency with free and guaranteed convertibility?

Two additional conditions apply: that the exchange rate be effective (realistic and, thus, not susceptible to speculative attacks) and that the members of the union adhere to one monetary policy.

Actually, history shows that the condition of a single currency, though preferable, is not a sine qua non. A union could incorporate