We compare risk sharing in response to demand and supply shocks in four types of currency unions: segmented markets; a banking union; a capital market union; and complete financial markets. We show that a banking union is efficient at sharing all domestic demand shocks (deleveraging, fiscal...

We compare risk sharing in response to demand and supply shocks in four types of currency unions: segmented markets; a banking union; a capital market union; and complete financial markets. We show that a banking union is efficient at sharing all domestic demand shocks (deleveraging, fiscal...

This paper reviews the East Asian experience with financial integration, how economies in the region have responded to shocks, and what they may do to continue to thrive in the future. It discusses openness to capital flows as a key aspect of financial integration, briefly considering the...