121 The Assessment of Convergence in the EU Using the Optimum Currency Area Index Magdaléna Drastichová VŠB-TU Ostrava Faculty of Economics, Department of Regional and Environmental Economics Sokolská třída 33 Ostrava 1, 701 21 Czech Republic e-mail: magdalena.drastichova@vsb.cz Abstract Structural convergence is a crucial requirement of functioning economic and monetary integration in the European Union (EU). It can be overall examined using the Optimum Currency Area (OCA) index. The OCA index can be used as a tool for assessing the possibilities of successful working of countries in the single currency area and can help to avoid some negative effects of entering unsuitable countries to euro area. However, it is also used to assess the level and development of structural convergence in the EU in general. It can be then interpreted as a “level of convergence or variability” of particular EU country in relation to comparative economy. The OCA index is computed for EU members using panel regression in the period 1999-2009. Particular components of OCA index are also important factors of convergence. Other factor that is able to influence the development of the OCA index is the hypothesis of endogeneities of OCA. External shocks have influence on convergence and development of OCA index as well. There arises the necessity to assess the euro area entry possibilities of non-members carefully due to problems of current euro area. Countries can benefit from participation in euro area. The most important long- term impact of deepening integration and particularly euro area membership is the impact on economic growth. However, the level of structural convergence can be crucial for it. The aim of this paper is using the OCA index to assess the convergence in terms of OCA in the EU and describe aspects of global financial crisis for convergence process as well. Keywords: Optimum Currency Area, Economic Shock, Convergence, Hypothesis of Endogeneities JEL codes: F15 1. Introduction It is possible to assess convergence of EU economies in several ways. One possibility is the usage of the Optimum Currency Area (OCA) theory that focuses on assessment of benefits and costs of monetary integration. It also introduces analyses focused on the choice of exchange rate regime. There are many criteria of the OCA. More of these criteria lead to contradictory results. So, it is not possible to satisfy all the criteria (or more of them) simultaneously. Moreover, the values for criteria are not quantified exactly. It is thus not possible to determine the threshold between insufficient and sufficient convergence. For that reason I chose the construction of OCA index that enables to quantify convergence according to the OCA theory. The level and development of convergence is described by the number or its development. This OCA index is computed by panel regression and it is instrumental in assessing the convergence and suitability of country for monetary union. However, index should be interpreted carefully due to complex mutual relations among variables, endogenous criteria, and