Exchange rates and monetary policy

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Series Title
Series Details ECON 120 EN (August 2000)
Publication Date August 2000
Content Type

The Single Currency was a logical consequence of the Single Market, and in particular of free capital movement. Monetary union has eliminated the danger of currency crises within the euro area. At the same time, the external exposure of the participating economies, in terms of trade outside the domestic currency area, has been reduced from about 30% of GDP to about 16% Does this mean that the area can now conduct a policy of 'benign neglect' towards the euro's exchange rate? Should its recent depreciation affect internal monetary policy?

Source Link Link to Main Source http://europarl.europa.eu/workingpapers/econ/pdf/120_en.pdf
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