Optimum Financial Areas (OFAs): Development of more modern tools for policymakers when determining economic policy and financial stability.
When examining examples of financial market integration over the past 300 years, some could argue that the slow but steadfast progress towards consolidation of financial economic regions is inevitable. In order to perform analysis upon the governance of these financial integrations, can and should the lessons of the United States, Canada and, more recently, Europe be transplanted to other areas of the world such as Asia?
This paper, “Theory of Optimum Financial Areas: Retooling the Debate on the Governance of Global Finance”, develops the idea of Optimum Financial Areas (OFAs) as a more pertinent and modern tool for policymakers when determining economic policy in the aim towards financial stability. In this increasingly integrated world, the authors encourage policymakers to utilise the OFA framework in order to better weigh up the costs versus benefits of the wider technical market substructures and macro-prudential elements in play.
- The Johns Hopkins University SAIS
- University of Amsterdam and SAIS Europe