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N° 217 |
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| November 2002 |
| Enlarging European
Monetary Union |
| Amina Lahrèche-Révil |
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| Joining the European Union implies eventually
joining the monetary union. For the Central and East European Countries (CEECs),
this means that the central parities of their currencies against the euro have
to be defined carefully when they enter the erm Mark II. These parities need to
be consistent with the requirements of nominal stability set out in the Maastricht
Treaty, as well as with the needs of economic catch-up faced by the transition
economies. Estimating the real equilibrium exchange rate provides a tool for characterising
the situation of the five future members of the Union. While some have been able
to maintain their real exchange rate close to its fundamental equilibrium level,
others have experienced strong volatility along with overvaluation. The prospects
of joining the emu now appear to be guiding the strategies of central banks: most
countries are stabilizing their exchange rates against the euro, though not always
at rates close to equilibrium parities. Capital flows will play a key role in
the ability of central banks to defend selected parities. |
Abstract |
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Full
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Estimating
the Fundamental Equilibrium Exchange Rate of Central and Eastern European Countries
the EMU Enlargement Perspective, Working Paper n° 03-05, June 2003
Exchange
Rate Regimes and Sustainable Parities for CEECs in the Run-Up to EMU Membership,
Working Paper n° 02-15, December 2002 |
Reference Working Paper |
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