Financially sustainable optimal currency areas

André Cartapanis, Marie-Hélène Gagnon and Céline Gimet

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: In current economic conditions, financial stability is paramount to the proper functioning of open markets. Financial stability must be balanced with financial flexibility. This relationship is deeply affected by financial fragmentation. This is why Central Banks have focused on these issues in the last decade in particular. Both financial stability and financial fragmentation have unintended consequences on optimal currency areas. In this paper, we survey the original optimal currency areas literature and relate it with the new literature on financial stability and financial fragmentation. We highlight the importance of new macroprudential policies both at the national and regional levels.

Keywords: Optimal currency areas; Financial stability; Financial fragmentation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323004312

DOI: 10.1016/j.frl.2023.104059

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