A Currency Crisis in Europe? The Europe's common currency and the new accession countries

Mariusz K. Krawczyk

No 278, HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA)

Abstract: The politically and legally complicated character of the EU Eastern Enlargement heavily influenced the conflict between the legal and economic rationality underlying the construction of the EMR-II. This makes the ERM-II vulnerable to currency crises and creates conditions for a widespread currency and asset substitution in the accession countries. As a result, the required participation of all accession countries in the ERM-II imposes unnecessary costs on the whole enlargement process. The costs could be avoided if the EU adopted a more flexible approach to the enlargement of its monetary union, allowing for an individual path of adopting the euro in each accession country depending on the country's economic conditions.

Keywords: EU enlargement; monetary integration; currency crisis; asset substitution (search for similar items in EconPapers)
JEL-codes: F32 F33 F36 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwadp:26309

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