The European Monetary Union (EMU) is a major institutional reform that substantially changes economic relations in the participating countries and their respective regions. EMU will deeply influence the division of labour and, hence, the spatial location of industries and the specialisation of regions. Regional specialisation, in turn, will affect the susceptibility of regions to asymmetric shocks, and the core-periphery divide of regional incomes, and will thus determine the impact of EMU on European regions. This raises the question whether all European regions will participate in the expected welfare benefits to a similar degree. Potentially, the integration process could also entail an increased instability of regional development and rising divergence of regional incomes such that there might be winners and losers of the integration process.