Editing Euro (section)

===Optimal currency area===
{{Further|Optimum currency area}}

In economics, an optimum currency area, or region (OCA or OCR), is a geographical region in which it would maximise economic efficiency to have the entire region share a single currency. There are two models, both proposed by [[Robert Mundell]]: the [[Optimum currency area#OCA with stationary expectations|stationary expectations model]] and the [[Optimum currency area#OCA with international risk sharing|international risk sharing model]]. Mundell himself advocates the international risk sharing model and thus concludes in favour of the euro.<ref>{{cite book|chapter=A Plan for a European Currency |date=1970 |orig-year=published 1973|last=Mundell |first=Robert|editor1=Johnson, H. G. | editor2= Swoboda, A. K. | title = The Economics of Common Currencies{{snd}} Proceedings of Conference on Optimum Currency Areas. 1970. Madrid. | publisher= Allen and Unwin | location = London |pages= 143–172 | isbn= 9780043320495}}</ref> However, even before the creation of the single currency, there were concerns over diverging economies. Before the [[late-2000s recession]] it was considered unlikely that a state would leave the euro or the whole zone would collapse.<ref>{{cite journal |ssrn=1014341 |title=The Breakup of the Euro Area by Barry Eichengreen |date=14 September 2007 |journal=[[NBER Working Paper]] |number=w13393|last1=Eichengreen |first1=Barry }}</ref> However the [[Greek government-debt crisis]] led to former [[British Foreign Secretary]] [[Jack Straw]] claiming the eurozone could not last in its current form.<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-politics-13839381 |title=Greek debt crisis: Straw says eurozone 'will collapse' |work=[[BBC News]] |date=20 June 2011 |access-date=17 July 2011}}</ref> Part of the problem seems to be the rules that were created when the euro was set up. John Lanchester, writing for ''[[The New Yorker]]'', explains it: {{blockquote|The guiding principle of the currency, which opened for business in 1999, were supposed to be a set of rules to limit a country's annual deficit to three per cent of gross domestic product, and the total accumulated debt to sixty per cent of G.D.P. It was a nice idea, but by 2004 the two biggest economies in the euro zone, Germany and France, had broken the rules for three years in a row.<ref>John Lanchester, "Euro Science", ''The New Yorker'', 10 October 2011.</ref>}}

Increasing business cycle divergence across the Eurozone over the last decades implies a decreasing optimum currency area.<ref>{{cite journal | doi=10.1007/s11079-024-09750-z | title=Optimum Currency Area in the Eurozone | date=2024 | last1=Beck | first1=Krzysztof | last2=Okhrimenko | first2=Iana | journal=Open Economies Review | doi-access=free  |issn = 0923-7992 }}</ref>