The question as to which currency to orient one’s economy to is only of secondary importance and is determined mainly by trade flows. Many emerging economies have been forced to learn that today, monetary issues can hardly be separated from topics such as the functioning of international financial markets or the soundness of the national banking system.
The higher jobless rate which results from this labour shedding process exacerbates the downward pressure on the general price level and sets the conditions for this process to become self-feeding. Second, following a similar logic, an inflation rate closer to 2% facilitates cross-regional adjustments in relative prices within a monetary union.