Monetary Policy in an Emerging European Economic and Monetary Union: Key Issues

Jacob Frenkel and Morris Goldstein

No 1990/073, IMF Working Papers from International Monetary Fund

Abstract: This paper discusses key issues relating to the design and implementation of monetary policy in an emerging European economic and monetary union. Specific institutional proposals for transition to EMU are neither endorsed nor dismissed. In examining the goals of monetary policy, the paper explores the interrelationships among price stability, current account equilibrium, and exchange rate stability. Turning to the implementation of monetary policy, the issues addressed are: coordination versus autonomy, rules versus discretion, and the role of sterilized official intervention. Finally, the last part of the paper emphasizes the importance of fiscal discipline, and evaluates several alternative mechanisms for encouraging it.

Keywords: WP; exchange rate; monetary policy; EMU participant; monetary policy coordination; exchange rate commitment; sterilized exchange market intervention; common currency; banking market; exchange market intervention; Exchange rates; Exchange rate arrangements; Exchange rate stability; Exchange rate policy; Europe (search for similar items in EconPapers)
Pages: 18
Date: 1990-08-01
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Journal Article: Monetary Policy in an Emerging European Economic and Monetary Union: Key Issues (1991)
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