Optimal Currency Areas: recent developments and perspectives for Mercosur members

Abstract

This paper consists of a review of the most important contributions to the understanding of the Optimum Currency Areas (OMA) and of the perspective of implementing such a policy measure into Mercosur. The theoretical support was obtained from reference studies on the European common currency which established the guidelines for the creation of the Euro zone. The findings on the literature review point out that a successful process of macroeconomic coordination is crucial for the implementation of a common currency area. Therefore, before engaging in a process of establishing a common currency area, Mercosur´s members must adopt supranational macroeconomic policy measures that would align their economies to reach stabilization in a regional context.