Optimum currency area theory:: A framework toward discussions of monetary integration

In the article we argue that the theory of optimum currency area (OCA) provides a framework for discussions about monetary integration. OCA theory basically attempts to answer the almost prohibitively difficult question: "What is the optimal number of the currencies to be used in one area?" Early in the paper we summarise the historical and discuss the possible future monetary integration of various regions in the world. We-then turn to theory, such as the classical contributions to OCA theory in the 1960s, and the modern "endogenous view". Next, empirical studies of OCA theory in connection with the EMU and the Czech Republic are presented, followed by a calculation of the so-called OCA index. We conclude that OCA theory is a long-term theory that lacks operational precision.