Euro area countries will undoubtedly experience disturbances that affect a single country or subsets of regions. Such country-specific shocks could be sources of tension within EMU unless they can be easily absorbed. Theory of optimum currency area emphasizes both the diversification of industrial structure and the flexibility of labor market as mechanisms which reduce the potential costs of the abandonment of national monetary policies. This paper investigates whether EMU itself can create conditions for a successful monetary union in the light of recently developed economic geography models. The economic geography models predict that closer integration leads to greater concentration of economic activities. Sector-specific shocks may then become country-specific shocks. In the absence of national monetary policies asymmetric shocks will be harder to deal with. On the contrary to static geography model, the dynamic economic geography model suggests that integration results in income convergence among member countries. In the situation of currently low migration across members, a gap of income differences will further decrease the incentive to migrate. As a result EMU may create neither the diversification of economic activities nor the flexibility of labor market which are essential for the adjustment to asymmetric shocks.