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Optimum Currency Area theory (OCA) is a body of research that has, since its inception in 1961, been highly influential for the discourse and design of Economic and Monetary Union, exercising a significant hermeneutical force. Nonetheless, there has been little acknowledgement that OCA is the subject of very significant internal disagreement, to the extent that economists writing within the field do not commonly agree upon the ontological foundations of the theory. This entails that the translation of the theory into political reality has been characterised by a series of often mutually contradictory narratives, which build upon schisms in the academic corpus. The political realisation of this can be seen during the negotiations over the 1992 process, where certain aspects of the theory concerning governance (of fiscal policy and preferences for conflict adjudication) have been notably suppressed, capitalising upon the fundamental uncertainty in the theory itself. The final part of the paper goes on to consider the financial crisis, and how OCA theory might aid policy-makers' attempts to induce ex-post convergence, demonstrating the continued relevance of the theory. Adapted from the source document.

As the euro is on its second decade, the European sovereign debt crisis and
the ever more evident disparities in competitiveness among member states are
prompting many to question whether monetary union is bringing more benefits
than costs. The optimum currency area (OCA) theory provides a framework with
several criteria for such analysis. In such context, we start by a
descriptive analysis of the first twelve euro countries under six criteria,
leading to a mixed conclusion on whether the EMU is closer or farther to
fulfil them. Then we assess the impact of five OCA criteria on countries?
relative competitiveness. Differences in the growth of unit labour costs,
the dissimilarity of trade and the differences in output growth were found
to be the most significant. This way, we identify some causes of the
divergent competitiveness between some EMU countries that contributed to
weaker economic growth in some of them.

Although the increasing heterogeneity as an effect of European Union enlargement, referring especially to the last two waves, is perceived as a single internal market and also euro single currency risk, European Monetary Union represents an important step towards deepening economic integration. Controversy on the Optimum Currency Area issue has created difficulties in empirical research effort to find appropriate responses to the EMU dilemma: is Euro zone an "optimum" or rather "viable" currency area?