description
Much of the economic analysis of moving to EMU has been undertaken within the context of the Optimal Currency Area paradigm. This spatial/geographic counterpart of the currently dominating model of the nature and evolution of money, here termed M theory, whereby money is viewed as having developed from a private sector cost minimisation process to facilitate trading. Here, I argue, first, that there is a second, cartalist, or C theory alternative, which is empirically more compelling. Second, I claim that this approach can predict observed relationships between sovereign countries and their currencies better than the OCA model.