The European Union (EU) is a unique political and economic partnership that currently consists of 28 member states (see the map in the Appendix ). Built through a series of binding treaties, the Union is the latest stage in a process of integration begun after World War II to promote peace and economic recovery in Europe. Its founders hoped that by creating specified areas in which member states agreed to share sovereignty—initially in coal and steel production, trade, and nuclear energy—it would promote interdependence and make another war in Europe unthinkable. Since the 1950s, this European integration project has expanded to encompass other economic sectors; a customs union; a single market in which capital, goods, services, and people move freely (known as the "four freedoms"); a common trade policy; a common agricultural policy; many aspects of social and environmental policy; and a common currency (the euro) that is used by 19 member states. Since the mid-1990s, EU members have also taken steps toward political integration, with decisions to develop a Common Foreign and Security Policy (CFSP) and efforts to promote cooperation in the area of Justice and Home Affairs (JHA). Twenty-two EU members participate in the Schengen area of free movement, which allows individuals to travel without passport checks among most European countries. The EU is generally considered a cornerstone of European stability and prosperity, but the union faces a number of internal and external challenges. Perhaps most notable is "Brexit"—the United Kingdom's (UK's) looming exit from the EU following the June 2016 public referendum in which British voters favored leaving the bloc by 52% to 48%. The UK remains a full member of the EU until it completes withdrawal negotiations and formally exits the bloc (which is widely expected to occur in March 2019). Although Brexit may have political, economic, and institutional implications for the EU, this report largely addresses the EU and its institutions as they currently exist. For more information on the range of issues confronting the EU, including Brexit and concerns such as terrorism and migration, see CRS Report R44249, The European Union: Current Challenges and Future Prospects . EU member states work together through common institutions (see next question) to set policy and promote their collective interests. Decisionmaking processes and the role of the EU institutions vary depending on the subject under consideration. On a multitude of economic and social policies (previously termed Pillar One, or the European Community), EU members have essentially pooled their sovereignty and EU institutions hold executive authority. Integration in these fields—including trade and agriculture—has traditionally been the most developed and far-reaching. EU decisions in such areas often have a supranational quality because most are subject to a complex majority voting system among the member states and are legally binding. For issues falling under the Common Foreign and Security Policy (once known as Pillar Two), member states have agreed to cooperate, but most decisionmaking is intergovernmental and requires the unanimous agreement of all EU countries. Any one national government can veto a decision. For many years, unanimity was also largely the rule for policymaking in the Justice and Home Affairs area (formerly Pillar Three). However, the 2009 Lisbon Treaty extended the EU's majority voting system to most JHA issues, thus giving EU institutions a greater role in JHA policymaking (see " What Is the Lisbon Treaty? "). The EU is governed by several institutions. They do not correspond exactly to the traditional branches of government or division of power in representative democracies. Rather, they embody the EU's dual supranational and intergovernmental character: The European Council acts as the strategic guide for EU policy. It is composed of the Heads of State or Government of the EU's member states and the President of the European Commission; it meets several times a year in what are often termed "EU summits." The European Council is headed by a President, appointed by the member states to organize the Council's work and facilitate consensus. The European Commission is essentially the EU's executive and upholds the common interest of the EU as a whole. It implements and manages EU decisions and common policies, ensures that the provisions of the EU's treaties are carried out properly, and has the sole right of legislative initiative in most policy areas. It is composed of one Commissioner from each EU country, who is appointed by agreement among the member states to five-year terms and approved by the European Parliament. One Commissioner serves as Commission President; the others hold distinct portfolios (e.g., agriculture, energy, trade). On many issues, the Commission handles negotiations with outside countries. The Council of the European Union (also called the Council of Ministers ) represents the national governments. The Council enacts legislation, usually based on proposals put forward by the Commission, and agreed to (in most cases) by the European Parliament. Different ministers from each country participate in Council meetings depending on the subject under consideration (e.g., foreign ministers would meet to discuss the Middle East, agriculture ministers to discuss farm subsidies). Most decisions are subject to a complex majority voting system, but some areas—such as foreign and defense policy, taxation, or accepting new members—require unanimity. The Presidency of the Council rotates among the member states, changing every six months; the country holding the Presidency helps set agenda priorities and organizes most of the work of the Council. The European Parliament represents the citizens of the EU. It currently has 751 members who are directly elected for five-year terms (the most recent elections were in May 2014; the next elections are due in May 2019). Each EU country has a number of seats roughly proportional to the size of its population. Although the Parliament cannot initiate legislation, it shares legislative power with the Council of Ministers in many policy areas, giving it the right to accept, amend, or reject the majority of proposed EU legislation in a process known as the "ordinary legislative procedure" or "co-decision." The Parliament also decides on the allocation of the EU's budget jointly with the Council. Members of the European Parliament (MEPs) caucus according to political affiliation, rather than nationality; there are eight political groups and a number of non-attached MEPs. Other institutions also play key roles. The Court of Justice interprets EU laws and its rulings are binding; a Court of Auditors monitors financial management; the European Central Bank manages the euro and EU monetary policy; and advisory committees represent economic, social, and regional interests. On December 1, 2009, the EU's latest institutional reform endeavor—the Lisbon Treaty—came into force following its ratification by all of the EU's then-27 member states. It is the final product of an effort begun in 2002 to reform the EU's governing institutions and decisionmaking processes. It amends, rather than replaces, the EU's two core treaties—the Treaty on European Union (TEU) and the Treaty on the Functioning of the EU (TFEU). Changes introduced by the Lisbon Treaty seek to enable the EU to function more effectively; enhance the EU's role as a foreign policy actor; and increase democracy and transparency within the EU. To help accomplish these goals, the Lisbon Treaty established two new leadership positions: The President of the European Council, a single individual who chairs the meetings of the EU Heads of State or Government, serves as coordinator and spokesman for their work, seeks to ensure policy continuity, and strives to forge consensus among the member states. A dual-hatted position of High Representative of the Union for Foreign Affairs and Security Policy to serve essentially as the EU's chief diplomat. The High Representative is both an agent of the Council of Ministers—and thus speaks for the member states on foreign policy issues—as well as a Vice President of the European Commission, responsible for managing most of the Commission's diplomatic activities and foreign assistance programs. Other key measures in the Lisbon Treaty included the following: Simplifying the EU's qualified majority voting system and expanding its use to policy areas previously subject to member state unanimity in the Council of Ministers. This change was intended in part to speed EU decisionmaking, but member states still tend to seek consensus as much as possible. Increasing the relative power of the European Parliament by strengthening its role in the EU's budgetary process and extending the use of the "co-decision" procedure to more policy areas, including agriculture and home affairs issues. As such, the treaty gives the European Parliament a say equal to that of the member states in the Council of Ministers over the vast majority of EU legislation (with some exceptions, such as most aspects of foreign and defense policy). For the first time in the EU's history, the Lisbon Treaty also introduced an "exit clause"—Article 50 of the TEU—which outlines procedures for a member state to leave the EU. A member state that decides to leave would invoke Article 50 by notifying the European Council of its intentions, which would trigger a two-year period for withdrawal negotiations to be concluded; the EU may also decide to extend the time for negotiations. The UK government invoked Article 50 in March 2017, giving effect to its June 2016 vote to leave the EU. Nineteen of the EU's current 28 member states use a common single currency, the euro, and are often collectively referred to as "the eurozone." The gradual introduction of the euro began in January 1999 when 11 EU member states became the first to adopt it and banks and many businesses started using the euro as a unit of account. Euro notes and coins replaced national currencies in participating states in January 2002. Eurozone participants share a common central bank—the European Central Bank (ECB)—and a common monetary policy. However, they do not have a common fiscal policy, and member states retain control over decisions about national spending and taxation, subject to certain conditions designed to maintain budgetary discipline. In 2009-2010, a serious crisis in the eurozone developed. It began in Greece due to the country's high sovereign (or public) debt load.