ABSTRACT
Introduction The integration of the European currency has generated a large body of literature. During early discussions, the adoption of a common currency was regarded as a daring venture to the point of almost defying the gravity of skepticism rooted in the economic reasoning of optimal currency area (OCA) theories. Along with the OCA, the optimal sequence of economic and currency integration in Europe was also debated throughout the 1960s and 1970s: “The ‘economists’ considered economic convergence should happen before actual monetary integration. The ‘monetarists’ . . . believed just the contrary: monetary integration would act as a trigger for economic convergence in the EEC/EU.”1 Although the preconditions for monetary integration seemed to be insufficient from the economists’ viewpoint and according to many OCA criteria, the European monetary system (EMS) initiative that yielded the common currency of the euro formally started in 1999 – and it quickly became a success story. Indeed, it rapidly ascended to become a strong contender to the US dollar as the reserve currency for central banks.
