What implications, if any, do you draw about EMU as an OCA for these 4 countries and why - Essay Example

EMU can also be as optimal currency areas for the four countries such as France, Germany, Italy and UK and it has certain amount of implications for these four countries. A member state must comply and should be a part of the EMU stage to adopt Euro as a common currency in the member states for managing trade and exchange rate. This Union is essential for ensuring that the member states of the European nations are able to increase the efficiency of the economies of European Union (Melitz, 2011).

After the crisis in the year 2009, the European nations are identified to face adequate challenges in terms of managing the value of Euro, which affected the economic conditions to a certain extent. In this regard, the member states of the European Union are needed to adopt Euro as the common currency. The monetary framework of European Union is also required to control the output as well as inflation of these four countries and help to stabilise the economy by preventing the politically encouraged interventions (Shambaugh, 2012; Angeloni & Dedola, 1999;).

The individuals against the EMU noted that Euro will be in dangerous situation if the contributing countries do not fulfil the requirements of OCA. The endogenous OCA theory recommended that economic and monetary integration play a vital role in shaping the EMU (European Monetary Union). OCA offers support of educational services to the politicians to make a stronger integration level in the EMU. The properties of OCA have developed for most analysed countries, but the periphery of EMU has not been predicted by the endogenous theory.

The theory of OCA also suggested that monetary union is useful for economies and it also involved in high labour price, mutual trade and flexibility in wages (Buiter, 2012; Vieira & Vieira, 2010). OCA has an impact on the decision to enter the EMU. The comparison value of index of EMU states that