ABSTRACTThe notion of a European Monetary Union can be interpreted in different ways. To most non‐economists it probably implies a single European currency and a European central bank. To economists, however, a monetary union implies only (in the words of the 1970 Werner Plan): ‘the irrevocable fixing of parities and the total liberalization of capital movements’. To others still a monetary union might be reached if there is a widely used European parallel currency. This article argues that these paradigms imply different degrees of monetary integration, and that the benefits that can be expected from a monetary union for Europe depend on the degree of monetary integration. Which paradigm should be chosen, therefore, depends on the reasons for which a monetary union for Europe is deemed desi