The efforts toward monetary integration in Europe did much to renew and keep alive general interest on such issues as the choice of exchange rate regime, the appropriate scope of currency areas, and their implications for participating countries as well as for the rest of the world.4 The exchange rate and balance of payments implications of monetary integration have been examined at length in the literature from a variety of perspectives. But the impetus for the research on issues concerning monetary zones was provided by an early and classic article by Mundell (1961), which introduced the concept of “optimum currency areas” and analyzed its implications.