Is There a Safe Passage to EMU? Evidence on Capital Controls and a Proposal

Barry Eichengreen, Andrew Rose and Charles Wyplosz

No 1061, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper provides evidence on the effects of capital controls. We show that controls have been associated with significant differences in macroeconomic behaviour, especially in monetary policy. While they have not prevented speculative attacks, they have provided the breathing space needed to organize orderly realignments. We also provide evidence on the channels through which speculative attacks operate, showing that bank lending to non-residents is a key transmission mechanism. We conclude with a discussion of measures that mimic some of the effects of controls as a way of easing the transition to European Monetary Union. Non-interest-bearing deposit requirements on lending to non-residents are proposed as a third-best route to monetary union.

Keywords: EMS; Exchange Rate Crisis; Exchange Rates; Speculative Attacks (search for similar items in EconPapers)
JEL-codes: F31 F32 (search for similar items in EconPapers)
Date: 1994-11
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Citations: View citations in EconPapers (8)

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Related works:
Chapter: Is There a Safe Passage to EMU? Evidence on Capital Controls and a Proposal (1996)
Working Paper: Is There a Safe Passage to EMU? Evidence on Capital Controls and a Proposal (1995)
Working Paper: Is There a Safe Passage to EMU? Evidence on Capital Controls and a Proposal (1995)
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