ABSTRACT
Economic parameters alone do not explain the existing division into currency areas, nor do they determine the ability of such areas to function properly. Because adjusting the exchange rate is an effective, difficult to replace adjustment mechanism, improving the economic competitiveness of a currency area in crisis situations, it is rational for the ability to use this instrument to be placed at the level of the community with which citizens identify most strongly. In the case of the European Union, the optimal area of the social community for a single currency is the nation state. In situations of a loss of competitiveness, the inability to prevent economic and social degradation through exchange-rate adjustment may lead in particular member states to the development of populism and radical nationalism, threatening the democratic order and peaceful international cooperation. This is why depriving member states of their own currencies may, contrary to the intentions of the decisionmakers, threaten the future of the EU rather than encouraging further European integration. We believe that in order to function safely, EU member states, particularly the medium-sized and large ones, should have their own currencies.
