| 单词 | optimum currency area |
| 释义 | optimum currency area The best area to use a single currency. To see what determines this, assume there are two separate currency areas, and consider the gains and losses from uniting them. The gain is the reduction in transactions costs in respect of trade and financial transactions between them, and the reduction in currency risk affecting such transactions. This is greater, the larger such transactions are relative to national incomes. The loss is that if the areas are affected by asymmetric shock, or have different preferences about any trade-off between stable prices and stable real output, having a single currency removes changes in the exchange rate between them as a possible equilibrating mechanism. How important this is depends on one's view as to whether exchange rate changes are effective in inducing shifts in real behaviour, or whether they simply promote inflation in the area whose currency is devalued. For any given level of transactions costs, the net advantage of a single currency increases the more similar the areas are in their preferences and the shocks they are expected to sustain, and decreases the more their preferences and expected shocks differ. The desirability of a single currency also depends on the effectiveness of the other available means of adjustment. The more prices are flexible and factors of production are mobile, the less the need for exchange rate adjustments, so the greater the net benefits of a single currency. If incomes in the two areas are liable to different patterns of fluctuation, a common fiscal system assists in coping with the resulting shifts in relative incomes, so some economists believe that a common currency requires a common fiscal system. The question of whether a single currency for the European Union (EU) is desirable is extremely controversial. |
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