The Theory of Optimum Currency Areas: Exit and Entry Requirements

Dana Prymak, Thompson Rivers University

Abstract

The twenty-first century has brought a number of drastic political decisions and profound economic changes that were empowered by the idea of globalization and the development of pluralistic societies. A willingness to create the optimum currency area is an integrative step for “even closer union.” “Even closer union” reflects the goals of the European Union for a closer interstate collaboration. Lots of others possible monetary union across the globe are watching closely the EU success and failures, trying to proceed with the same trials on their own.The focus of the research is to examine the behaviour of monetary unions that meet the optimum currency areas (i.e., US) with other monetary unions such as the Eurozone. The subject of optimum currency area will be explored with respect to economic integration, as it relates to the cost of sharing a one-size-fits-all monetary policy, labor mobility and fiscal integration. The research presents the question of adding flexibility to the process of sharing a single currency. The research aims to explore the possibility of the entry and exit of the area members.

 

The Theory of Optimum Currency Areas: Exit and Entry Requirements

The twenty-first century has brought a number of drastic political decisions and profound economic changes that were empowered by the idea of globalization and the development of pluralistic societies. A willingness to create the optimum currency area is an integrative step for “even closer union.” “Even closer union” reflects the goals of the European Union for a closer interstate collaboration. Lots of others possible monetary union across the globe are watching closely the EU success and failures, trying to proceed with the same trials on their own.The focus of the research is to examine the behaviour of monetary unions that meet the optimum currency areas (i.e., US) with other monetary unions such as the Eurozone. The subject of optimum currency area will be explored with respect to economic integration, as it relates to the cost of sharing a one-size-fits-all monetary policy, labor mobility and fiscal integration. The research presents the question of adding flexibility to the process of sharing a single currency. The research aims to explore the possibility of the entry and exit of the area members.