Is the Eurozone not a monetary union, but an extraordinary exchange rate union?
AbstractThe Target imbalances within the Eurozone can be interpreted as a sign of a missing balance of payments adjustment mechanism for the member countries. As the Eurozone lacks a fiscal union, in economic theory it is more an exchange rate union or a system of fixed exchange rates than a monetary union. In the latter, there would not be any national balances of payments, but only one for the whole Eurozone. This paper will show why the Target System is a crucial indicator for the Eurozone not being a monetary union, but an exchange rate union and why countries holding Target liabilities against the European System of Central Banks can be compared to a reserve currency country, e.g. like the US during the Bretton-Woods-System. --
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Bibliographic InfoPaper provided by Universität der Bundeswehr München, Economic Research Group in its series Working Papers in Economics with number 2013,2.
Date of creation: 2013
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Target Imbalances; Balance of Payments Crisis; Balance of Payments Adjustment Mechanism; Eurozone; Fixed Exchange Rates; Fiscal Union;
Find related papers by JEL classification:
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-24 (All new papers)
- NEP-EEC-2013-06-24 (European Economics)
- NEP-MAC-2013-06-24 (Macroeconomics)
- NEP-MON-2013-06-24 (Monetary Economics)
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