The existence of an optimum currency area is not a given even if all parties are...

The existence of an optimum currency area is not a given even if all parties are well-intentioned. What are the other necessary aspects of coordination that raise the chances for success?

Expert Solution

Optimal currency area means using one currency in a particular geographical region. There are different aspects of coordination that can make it successful. The first aspect is to strong willingness to increase the efficiency of trade. With this aspect, nations will compliment each other and one currency can be used. The second aspect is the ability among the nations to absorb the economic fluctuations in one country, by another country. It will maintain the value of currency used and longevity to the optimum currency area is created. The third aspect is the formation of proactive committee or group having members of the nations that will apply suitable monetary policy. It will help stabilize the inflation, regulate the money supply and other macroeconomic challenges. The next aspect is the trade preference given to each other by the nations who participate in the optimal currency area.

Above aspects can bring success to the optimal currency area.

Rahul Sunny answered 10 months ago

make analysis by yourself to judge if EU is an optimum currency area?

Is a weaker currency bad news for all parties in the economy? explain answer

What is the problems for third parties from the existence of the corporate veil?

With the use of appropriate diagram(s), carefully explain the theory of optimum currency areas.

3. Critically assess whether African countries should form optimum currency areas.

Show that of all isosceles triangles with a given perimeter , the one with greatest area...

Show that of all isosceles triangles with a given perimeter , the one with greatest area is equilateral.

What is the relationship between cash flows among the three parties in a currency swap. Describe...

What is the relationship between cash flows among the three parties in a currency swap. Describe how Firm A, Firm B, and the swap bank pay and receive cash flows.

All normally ductile polymers can also craze even in the absence of solvents, given the right...

All normally ductile polymers can also craze even in the absence of solvents, given the right circumstances. The crazing stress of each polymer is slightly sensitive to temperature but insensitive to strain rate. Ductile to brittle transition temperature (Tb) are often found at low temperatures for such polymers; explain why Tb shifts to higher temperatures at increasing strain rates. (Hint: the easiest way to explain this is to use diagrams. If you do, be sure the label the curves and...

Discuss the meaning of this statement: All foreign currency transactions are in a currency other than...

Discuss the meaning of this statement: All foreign currency transactions are in a currency other than the entity’s recording currency. These transactions can include purchases or sale of goods and services in a foreign currency, loans payable or receivable in a foreign currency, and purchase or sale of foreign currency units. Define and describe the difference between functional currency, reporting currency, and local currency in the context of a multinational company and its subsidiaries. How do they relate to foreign...

Which currency area, the 50 states of the United States or the member nations of the...

Which currency area, the 50 states of the United States or the member nations of the euro-zone, performs better as an optimum currency area?

Question