a. What are the advantages and disadvantages of a currency union b . Describe the theory of optimum currency areas Solution a) Currency union implies the practice where the various countries join their currrencies into the single currency. Euro is an axample of the currency union. it was formed in year 1999. following are the advantages of currency union: Disadvantages: b. Optimum currency area refers to the geographical area where the single currency can promote the growth and development as comparison to the different currencies that are adopted by the different countries..