Nominal and Real Convergence as a Determinant for Joining the European Monetary Union

Kasumović Merim and Heric Erna
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Kasumović Merim: Faculty of Economics, University of Tuzla, Bosnia and Herzegovina
Heric Erna: Faculty of Economics, University of Tuzla, Bosnia and Herzegovina

Economics, 2017, vol. 5, issue 1, 52-71

Abstract: The thematic framework of this work is the nominal and real convergence as a determinant for joining the European monetary union. The focus of the work is to prove that realising the criteria of the convergence affects the stability of the European monetary union, that is, that the cause of destabilisation is exactly the fact that certain member nations have not realised the assigned convergence criteria. The financial integration is an important question because it contributes to the economic growth affecting free exchange with the goal of a more efficient allocation of capital; it is the result of the economic theory and the empirical research. Introducing the Euro as a single payment method while losing the monetary sovereignty of the countries which have accepted it is the main reason for forming the European Central Bank. The mission of the European Central Bank is to define and conduct a single monetary policy within the Eurozone. Because of the already mentioned facts, the challenges of conducting the fiscal policy within the Eurozone as well as the key aspects of the monetary unification of Europe have been analysed. The results of this analysis should point out the stability of the EMU by the convergence degree of the member nations from a single monetary area.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:econom:v:5:y:2017:i:1:p:52-71:n:3

DOI: 10.1515/eoik-2017-0011

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