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What is an OCA and how is the economic logic of an OCA satisfied?

What is an OCA and how is the economic logic of an OCA satisfied?

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In economics, OCA refers to an optimum currency area, also known as an optimal currency region (OCR), is a geographical region wherein a single currency would help in the maximisation of economic welfare and enhancing the macroeconomic performance.

According to the OCA theory, the economic logic that a country which considers membership in a currency union must balance the economic stability loss (which means losing national monetary policy) against the monetary efficiency gain (which means a competitiveness gain due to a fall in the general price level, stimulating the aggregate demand and enhanced exports) of a single currency.

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