Monetary strategies for joining the euro

Abstract:

This work presents a collection of papers given at the seminar 'Monetary Strategies for Accession Countries', held in Budapest in February 2003. Accession to monetary union is an obligation of the ten new Member States, although they have the freedom to choose the timing of their adoption of the euro. They must therefore seek appropriate strategies to ensure both nominal and real convergence on joining the EMU.

The book is organised over seven chapters. The first chapter looks at the challenges faced by the accession countries. Chapter two groups together thoughts on exchange rate policies and EMU participation and the necessary structural reforms and consolidation of public finances. Chapter three explores the vulnerability of eight Central and Eastern European accession countries during the period from accession to adoption of the euro, exposed as they are to the 'whims' of international financial markets and increased volatility of exchange rates. Chapter four examines the importance of the Balassa-Samuelson effect in the new Member States. The choice of exchange rate regime and the disciplines of the ERM code of conduct are featured in chapter five, which goes on to suggest that new EU members should join the ERM-II as soon as their fundamentals allow. The Portuguese experience of integration in the European Union is explored in chapter six, particularly the period 1996-2001, the crucial years of EMU participation. Chapter seven examines the macroeconomic adjustment to structural change to be experienced by the accession countries in their progress towards nominal convergence and real convergence.

The work will interest scholars and students, policy makers and economists engaged ion European studies or European integration.

György Szapàry is Deputy Governor of the Magyar Nemzeti Bank, Hungary. Jürgen von Hagen is Professor of Economics and Director of the Center for European Integration Studies (ZEI) at the University of Bonn, Germany.