Convergence Criteria and European financial crisis. ECONOMIC AND MONETARY UNION (EMU). Optimal Currency Area. The Optimal C urrency Area theory was behind the European Single Currency argument. It requires: An absence of asymmetric shocks
ECONOMIC AND MONETARY UNION (EMU)
The Optimal Currency Area theory was behind the European Single Currency argument. It requires:
Thus, to meet conditions above, there is a convergence criteria for establishing Eurozone.
– has joined ERM II (Exchange Rate Mechanism) for previous 2 years and not devalued its currency
Source: European Central Bank
Source: national governments and Eurostat:
X = above threshold value