The European Union is an economic and political organisation consisting of 28 member countries. The main objective of the European Union is the economic and political integration of the European continent. The process of integration started with forming of the European Coal and Steel Community in Paris in 1951. The European Coal and Steel Community establishment was based on Schuman Declaration, and its main objective was a prevention of further wars in the future between France and Germany. The European Union was established by ratification of the European Union Association Agreement which is better known as Maastricht Treaty in 1992. The Treaty presents a turning point for further development of the European Union as it increased the cooperation between the member countries in several new sectors. The idea of creating a common European currency originates in the 1960s, while the constitution of the European Single Market in 1987 creates a tremendous incentive towards it. In order of achieving the full potential of the European market it is necessary to create a common European currency which would ensure the price transparency, reduce the transaction costs and eliminate exchange rates among the member states. The European Monetary Union was established in 1992, and euro as a common currency was introduced in 1999. The objective of this paper is to give a theoretical overview of the European Monetary Union with its goals, missions, instruments, advantages, disadvantages, and institutional regulations.