Exchange Rate Policy in Central and Eastern Europe in the Context of EU Accession1

George Kopits

Chapter 2 in Shaping the New Europe, 2004, pp 49-83 from Palgrave Macmillan

Abstract: Abstract This chapter examines whether it is desirable for, and the ability of, the Central and Eastern European candidates for accession to the European Union (EU) to participate in the new exchange rate mechanism (ERM-2), and eventually in the economic and monetary union (EMU). For most of these countries the benefits of participating in EMU are likely to outweigh the costs. The key conditions for operating within ERM-2 include wage flexibility, a prudent fiscal and monetary stance, and a sound financial system. Once they have met these conditions the candidates will be able to shadow the euro prior to formal participation. The chapter concludes with a discussion of two policy dilemmas.

Keywords: Exchange Rate; European Union; Euro Area; Real Exchange Rate; Exchange Rate Regime (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-52369-2_3

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DOI: 10.1057/9780230523692_3

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