Impediments in the European Monetary Union in the context of optimal monetary fields theory

In 1961, R. Mundell did the basic study on Optimal Currency Area Theory. This theory is a theory that explains whether the monetary field included in the monetary union, which is one of the final stages of economic integration, is an optimal area of money. In this theory, it is possible for a group of countries to stabilize the value of their own currencies over the exchange rate determined in the monetary area and to allow them to fluctuate against the currencies of countries other than the monetary area. Mundell explained whether a monetary field is an optimal monetary area, but states that the member states of the union need to provide conditions such as the mobility of production factors, the degree of openness of the economy, the degree of financial and economic integration, the degree of proximity between inflation rates, asymmetric shocks and price-wage flexibility. Mckinnon and Kenen have developed another perspective for theory. McKinnon and Kenen emphasized on the benefit and cost analysis that they can demonstrate the optimal area of any monetary area as a result of the benefit and cost analysis of monetary union. In addition, the monetary area is optimal if the countries involved are able to minimize the negative effects of shocks by their own economic indicators when they encounter any asymmetric shock. It is extremely important for the future of the Union and for the countries involved in the Union whether the euro area is the optimal area of money. After the global crisis in 2008, the question of whether the European Monetary Union is optimal or not is again on the agenda. From this point of view, in this study, it is determined whether the euro area is the optimal money area by considering the economic indicators of selected countries within the framework of the determined criteria of the optimal monetary area theory in the years discussed. When the economic indicators of selected countries are analyzed in the years taken into consideration, it is seen that a monetary area cannot achieve the economic similarity that will ensure that it is the optimal area. In addition, it is observed that the economic disparity between the central and peripheral countries, which are included in the monetary field, has increased further after the global crisis. Within the framework of the optimal monetary field theory, in order for a money field to be an optimal money field, it is necessary to have compatibility rather than mismatch in terms of the economic structures of the countries involved. In this respect, it is seen that the European Monetary Union does not meet the criteria determined for the optimum monetary area. Keywords: Optimal Currency Area, Economic Integration, Euro Crisis