EXCHANGE MARKET PRESSURE BEFORE ENTERING THE ERM II: THE CASE OF CENTRAL EUROPEAN COUNTRIES

Daniel Stavarek

The AMFITEATRU ECONOMIC journal, 2006, vol. 8, issue 19, 34-39

Abstract: This paper estimates the exchange market pressure in four Central European countries which are also new member of the European Union - Czech Republic, Hungary, Poland and Slovenia. As all new EU-member countries are supposed to join the European Economic and Monetary Union soon, they must pay attention on fulfilling of all convergence criteria. One of the criterions deals with exchange rate stability and is associated with membership in the Exchange Rate Mechanism II. Estimation and analysis of exchange market pressure are extremely important since almost all new EUmembers will be forced to switch their relatively flexible exchange rate regime to the ERM II which is considered as quasifixed. This paper reveals a significance of exchange market pressure in all types of exchange regime arrangement in all countries analyzed. The paper concludes that exchange market pressure achieved the highest level in fixed pegs regimes and the volatility of exchange market pressure was lowest in the floating regimes.

Keywords: Exchange market pressure; ERM II; Convergence criteria; New EU-members. (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:aes:amfeco:v:8:y:2006:i:19:p:34-39

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