Exchange rates are a matter of common concern: policies in the run-up to the euro?
AbstractThis paper discusses the reasoning behind the exchange rate policies set out in the Maastricht Treaty of the European Union. The question of the appropriate exchange rate policies for new member states of the EU should be seen from the wider perspective of Economic and Monetary Union, and the creation of a single market. Four basic arguments are made in defence of the current exchange rate framework:Â it is argued that exchange rate stability, per se, may be desirable if that is seen from the broader perspective of European integration, exchange rate stability is vital for countries attempting to lock permanently their exchange rate vis-Ã -vis the euro at a given parity,Â exchange rate stability prevents unilateral changes in the exchange rate that may delay partner countries' convergence relative to the Maastricht criteria, and finally a period of â€œinternshipâ€ inside the Exchange Rate Mechanism ensures that countries begin adjusting their behaviour/policies to the requirements of a common currency area.
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Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 191.
Length: 54 pages
Date of creation: Sep 2003
Date of revision:
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exchange rates; exchange rate policy; euro; maastricht treaty; economic and monetary union; EMU; exchange rate mechanism; ERM; Kontolemis;
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