{"id":29930,"date":"2015-04-30T16:53:43","date_gmt":"2015-04-30T16:53:43","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=29930"},"modified":"2024-04-03T13:16:41","modified_gmt":"2024-04-03T07:46:41","slug":"optimum-currency-areas","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/optimum-currency-areas\/","title":{"rendered":"OPTIMUM CURRENCY AREAS"},"content":{"rendered":"

\"OPTIMUM<\/a>OPTIMUM CURRENCY AREA {OCA} also known as optimal currency region is a geographical arena which is meant to maximize economic efficiency in order to have entire region to share single currency.It describes the optimal characteristics for the mergers of currencies or the creation of a new currency. The OCA may be larger than a country for example creation of euro zone was that the individual countries of Europe did not reach to form an optimal currency area , but Europe as a whole does form an optimal currency area.<\/span><\/p>\n

The main characteristics of optimal currency area are:<\/p>\n

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  1. It promotes free labour mobility across the entire region.<\/li>\n
  2. It promotes openness with capital mobility and price and wage flexibility across the region so, that the market forces of demand and supply automatically distributes money and goods to where they are needed.<\/li>\n<\/ol>\n

    It allows automatic fiscal transfer to redistribute money to the areas which are adversely affected by above two characteristics.It usually takes the form of redistribution of taxes to less developed countries. but there is a concern that better off countries would rarely give up their revenues.<\/p>\n

    There are additional criteria that have been suggested for OCA are:<\/p>\n