Competition, Coordination and Diversity

Competition, Coordination and Diversity

From the Firm to Economic Integration

New Thinking in Political Economy series

Pascal Salin

Competition, or the freedom to enter into a market, contributes greatly to the differentiation of human activities and therefore to economic progress. This fascinating book highlights the similarities between human systems at both the micro and macro level, and demonstrates how competition can positively affect the economic workings of firms and countries.

Chapter 10: Can optimum currency areas be determined in Europe?

Pascal Salin

Subjects: economics and finance, austrian economics


Trying to determine the “optimum” number of currencies in a given area – such as the European zone or the world – and to evaluate the desirable characteristics of these currencies is certainly an interesting problem from a purely intellectual point of view. But it is also important from a practical point of view, since many people wonder whether the eurozone can be considered as an optimal arrangement. In fact, it is quite common to hear people claim that the euro system will burst because of diverging economic conditions within the eurozone, or even that it ought to burst, which would mean that the eurozone is not an optimal currency area and that one may consider as more efficient to have a different – larger – choice of currencies in Europe. Therefore, the confidence many people had in the single currency may be decreasing, so it is important to try to evaluate the gains and costs of the single currency in Europe and to evaluate whether another monetary organization ought to be considered.

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