Reassessment of the ‘Optimum Currency Area’ Theory in the European Union

Abstract

A reassessment of the ‘optimum currency area’ in the European Union and its perspectives for the expansion in the modern economic conditions has been conducted in the research paper. Assessment of the optimum currency area has been made on the example of the countries from Central and Eastern Europe, which joined the Eurozone in recent years. The aim of the research paper was to compare the performance of the countries in the Eurozone with the performance of the countries with their single currencies. The research question was whether a single currency and centralized monetary policy can protect national economies from external shocks (balance of payments crises) or whether a single currency and independent monetary policy are a better option. It has helped to answer the question of whether an optimum currency area still exists in the European Union and whether it has potential for expansion and bringing benefits to future members. It has been proven that the Eurozone still remains an optimum currency area in the given borders with potential for further expansion.