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Exchange Rate Regimes and Nominal Convergence

In: The Eastern Enlargement of the Eurozone

Author

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  • Mateusz Szczurek

    (ING Bank)

Abstract
The paper examines theoretical literature, recent EMU accession examples, and current CEECs performance in search of the optimal currency regime for meeting the Maastricht criteria. Currency board arrangements seems to provide the fastest convergence. For other regimes, the markets may have theoretical and historical reasons to believe in the government's temptation to devalue on the ERM-2 entry. The government should announce the final date, and, possibly indicate the final exchange rate for the regime switch to avoid excessive currency and yield volatility. It should also underscore the central bank’s and EU authorities importance (even if non-existent) in the parity setting process to avoid excessive domestic debt inflation premium ahead of the accession. Recent experience shows that it will be easy to get rid of the remaining influence of cross rates on CEECs exchange rates.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Mateusz Szczurek, 2006. "Exchange Rate Regimes and Nominal Convergence," Springer Books, in: Marek Dabrowski & Jacek Rostowski (ed.), The Eastern Enlargement of the Eurozone, chapter 0, pages 91-111, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-25766-2_6
    DOI: 10.1007/0-387-25766-7_6
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    References listed on IDEAS

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    Cited by:

    1. Marek Dabrowski, 2006. "A Strategy for EMU Enlargement," Springer Books, in: Marek Dabrowski & Jacek Rostowski (ed.), The Eastern Enlargement of the Eurozone, chapter 0, pages 199-225, Springer.
    2. Michal Gorzelak, 2004. "Fiscal Costs of Delaying the EMU Accession - Medium Term Fiscal Projection for Selected New EU Members," CASE Network Studies and Analyses 0277, CASE-Center for Social and Economic Research.

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