“Optimum Currency Area” in the Balkan Region

Mateo Spaho

Faculty of Economics, European University of Tirana, Tirana – Albania

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Abstract

In economics, an “Optimum Currency Area”, also known as an optimal currency region (OCR), is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. It describes the optimal characteristics for the merger of currencies or the creation of a new currency. The theory is used often to argue whether or not a certain region is ready to become a currency union, one of the final stages in economic integration. Over time, step by step, is expected to join the EU Albania too. In a continuous and closer integration there’s a question if would have been profitable whether our country can adopt a common currency (Euro), as  many countries did  in the EU, or is better to follow another example that stops a further integration after EU membership, like (United Kingdom, Sweden, etc.).

It is Euro the right choice as a common currency for the EU? What are the criteria for an Optimum Currency Area? Do have different countries profitability with different levels of wealth, different populations and diversified products, adopting the samecurrencyor not? Through thetheoryof”Optimal CurrencyArea” elaborated by RobertMundell, Ronald Mc Kinnon and Peter Kenneth,will beanalyzed notonly if Europe is one of the Optimal Currency Area.It will be also analyzed whether the Balkan countries, divided byethnic, historical and cultural reasons, will have benefits from a common currency or at the opposite, a common currency would slow down their economic growth.

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