There is a tradeoff inherent in a currency union: You reduce your ForEx risk, but you have to accept a higher inflation target, because you encompass a larger area with more variation in price level and in price changes. A higher baseline inflation both reduces the distortion inherent in these differences, and allows countries to temporarily pursue low inflation as a way to get out-of-line price levels back in line with the majority.

Greater economic and political integration can make the inflation cost of a currency union smaller, but it probably can't make it go away entirely.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.