Optimum Currency Area (OCA) theory proves inadequate in the analysis of the
new regional monetary integration schemes that have sprung up among developing
and emerging market economies since the 1990s. Building on the concept of
‘original sin’ developed by Eichengreen et al. we argue that a different
conceptual framework is needed as these regional monetary South-South
integration (SSI) schemes differ fundamentally from North-South arrangements
because they involve none of the international reserve currencies. Insights
from the cases of monetary south-south cooperation in Southern Africa, East
Asia and Latin America suggest that SSI can have beneficial effects on
macroeconomic stability. This paper sketches a first set of hypotheses on the
necessary conditions for these stability gains to materialise
