Some of the reasons we are not concerned about the current account “imbalances” of the Australian states are that the Australian states have a common currency, a federal fiscal system, sizeable interstate labour mobility (of which I and much of my Adelaide cohort are a good example of) and generally experience similar economic shocks.
These are the main prerequisites identified for an optimal currency area. 9 The point of the two scenarios I’ve described here is that current account positions, even large ones, can exist that are benign and could not be classified as imbalances.