ABSTRACT
This chapter aims to appraise certain aspects of monetary and financial coordination and cooperation in the region. The goal of optimum currency area (OCA) can only be achieved over time in a gradual process. In the global scenario, there has been a growing trend towards regional economic integration. Now all countries are members of at least one regional trading block and many belong to more than one. The literature also discusses the macroeconomic criteria as prerequisite condition for forming an OCA. Most of the literature recognises the following interrelationships between the countries that would impinge on the benefits of adopting a common currency. Since members of an OCA give up their independent monetary policies to stabilise their domestic economies, it is recognised that they experience a synchronised business cycle for single monetary policy in the region to be effective. Full monetary integration, in whatever form it takes, implies that there exists fixed exchange rate, perfect coordination of monetary policy among countries.
