One of the most striking consequences of the recent episode of sovereign debt market stress in the Eurozone has been the increase in the share of public debt held by the domestic sector in fragile economies. However, the causes and potential consequences of this increase were only given scarce...

This survey presents an analysis that incorporates the lessons of the positive literature on the "third generation of crises" into the traditional optimum currency area theory to propose a new set of criteria that ensure better resilience of a monetary union to financial contagion. The study...