The PIIGS in times of sovereign debt crisis: The relevance of using the euro

The aim of this paper is to evaluate the relevance of PIIGS using the euro. The results of the text are: (i) the paper reveals that for the case of PUGS, it is not optimal to use the euro because they do not meet many of the criteria of the Theory of Optimum Currency Areas; (ii) Greece is the extreme case, because it is the country with the lowest degree of fulfillment of the criteria; (iii) the main incentive for the monetary integration of the PIIGS was their political proximity with its neighbors and the desire to import stability of countries, like Germany with a credible monetary policy, and (iv) it is reasonable that the United Kingdom continue using the pound, because it has the least political proximity to the European Union and a low degree of trade integration with their neighbors.