Traditional monetary and economic convergence in accordance with the Optimal Currency Areas model has a number of limitations. Above all, it fails to assess the state of formal and informal monetary institutions. Adequate for an industrial society, it does not address the change to a globalising information society, being mainly quantitative, aggregated, and generally mechanical. This removes it from reality, though keeping it close to a quantitative presentation. It fails to take into account invisible threats to convergence and East European country realities involving informal monetary institutions and differences in institutional development. Monetary regime efficiency is judged solely by Maastricht criteria fulfilment. These limitations may be overcome in two ways. The first is to take into account the institutional aspect of money, enabling discussion of institutional monetary convergence. The second way is to adopt institutional monetary competition, allowing at least some institutional competition in EEC monetary regimes in the run up to euro adoption and possibly allowing the euro to circulate in parallel with national currencies.
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Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number
35-2006.
Length: 23 pages Date of creation: Jul 2006 Date of revision: Handle: RePEc:icr:wpicer:35-2006
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Find related papers by JEL classification: E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
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