Difficulties of a single monetary policy for a large number of countriesI. INTRODUCTIONThe European Economic and Monetary Union (EMU) and the common currency, the euro, were initially presented as a source of economic growth and as a mechanism to make European markets less fragmented. However, the recent eurozone crisis has shown the complexity of the issue of a single monetary policy for a large number of countries. Recent economic developments in the Eurozone have therefore placed emphasis on the question of whether it is possible to pursue a “universal” monetary policy. This essay analyzes the viability of a single monetary policy led by the European Central Bank (ECB). and highlights some of its design failures as well as what can be done to overcome these difficulties.II THE ECONOMY OF THE EUROPEAN MONETARY UNIONThe 1992 Maastricht Treaty set out a progressive plan to implement an Economic and monetary union (EMU) in the European Union. with a common currency, the euro (Hansen, 2001). The treaty also implemented a set of convergence criteria, to achieve price stability, which member states must respect to adopt the new currency. The ECB, created by the Treaty of Amsterdam in 1998, defined and implemented the monetary policy of the 18 member states that constitute the euro zone (Hansen, 2001). The main objective of the ECB is to maintain price stability by keeping HICP inflation rates below, but close to, 2 percent (ECB, 2014). Many researchers have contributed to theories that serve as a guideline for assessing monetary integration. The desirability of a monetary union can be mentioned for the sake of simplicity...... middle of document ......25.Mongelli, FP (2002). “New” views on the theory of the optimal currency area: what does EMU tell us?. European Central Bank. Working Paper No. 138. Mongelli, FP (2008). European economic and monetary integration and the theory of the optimal monetary area. Commission of the European Communities, Directorate-General for Economic and Financial Affairs. Mundell, R. A. (1961). A theory of optimal currency areas. American Economic Review, 51(4), 657-665. Polito, V. and Wickens, M. (2014). How the euro crisis evolved and how to avoid another one: EMU, fiscal policy and credit ratings. Journal of Macroeconomics 39, 364-374. Rose, A. (2002). One currency, one market: estimation of the effects of common currencies on trade. Economic Policy 30, 9–45. Weber, AA (2011). Monetary policy challenges in the European Monetary Union. Review of the Federal Reserve Bank of St. Louis, 93(4), 235-242.