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Lessons from the Eurocrisis for East Asian Monetary Relations


  • I am grateful to Zhaoyong Zhang, Kiyotaka Sato and the participants to the conference for many useful comments and suggestions.


I analyse the sources of the Eurozone crisis. The major conclusion is that the Eurozone is insufficiently embedded in a monetary union, thereby making it fragile and prone to crises. The lesson I draw for East Asia is that despite the fact that this region appears to satisfy the traditional optimal currency area (OCA) criteria to form a monetary union, the complete absence of political unification makes the prospect of a monetary union in that region of the world both unrealistic and undesirable.