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Central Banking and the Choice of Currency Regime in Accession Countries

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  • Willem Buiter
  • Clemens Grafe

Abstract

[fre] Banque centrale et choix de régimes de change pour les pays candidats à l’adhésion . Cet article étudie les évolutions institutionnelles des Banques centrales ainsi que les régimes de change des pays de l’Est, candidats à l’UE. Nous examinons les régimes actuels et comment ils doivent évoluer afin des respecter les critères d’entrée dans l’UE et l’UEM. De plus, nous étudions avec quel degré les pays candidats satisfont les critères d’accession et nous les comparons aux performances des derniers entrants dans l’UE. Après avoir conclu que les critères d’accession ne favorisent pas nécessairement un régime de change particulier, nous analysons le pour et le contre des deux régimes envisagés comme les plus stables - le currency board et la cible d’inflation. Sous ces deux régimes, le respect des critères de faible inflation et de stabilité des changes est susceptible de produire de fortes tensions. . Classification JEL : E58, F31, P20 [eng] This paper deals with the design of appropriate Central Banking arrangements and exchange rate regimes for those CEECs that are candidates for full membership in the EU. We give an overview of the existing arrangements and point out to which extent monetary arrangements are restricted by conditions for entry both into the EU and into the EMU. Furthermore we investigate to which degree countries are fulfilling the accession criteria and compare their performance with the performance of earlier EU joiners. After concluding that the accession criteria do not necessarily favour a particular monetary regime, we analyse the pros and cons of the two regimes widely believed to be most stable-currency boards or inflation targeting. Under either regime tensions are likely to arise from the attempt to meet the accession criteria of a low inflation rate and a stable exchange rate. . JEL classifications : E58, F31, P20

Suggested Citation

  • Willem Buiter & Clemens Grafe, 2001. "Central Banking and the Choice of Currency Regime in Accession Countries," Revue d'Économie Financière, Programme National Persée, vol. 6(1), pages 287-318.
  • Handle: RePEc:prs:recofi:ecofi_1767-4603_2001_hos_6_1_4564
    DOI: 10.3406/ecofi.2001.4564
    Note: DOI:10.3406/ecofi.2001.4564
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    1. Willem H. Buiter & Clemens Grafe, 2002. "Anchor, float or abandon ship: exchange rate regimes for the accession countries," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(221), pages 111-142.
    2. Eduard Hochreiter & Helmut Wagner, 2002. "The Road to the Euro: Exchange Rate Arrangements in European Transition Economies," The ANNALS of the American Academy of Political and Social Science, , vol. 579(1), pages 168-182, January.
    3. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
    4. Jarko Fidrmuc, 2004. "The Endogeneity of the Optimum Currency Area Criteria, Intra‐industry Trade, and EMU Enlargement," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 1-12, January.
    5. Dobrescu, Emilian, 2002. "Macromodel Estimation for the Romanian "Pre-Accession Economic Programme"," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(5), pages 5-38, December.
    6. Raoul Lättemäe, 2003. "EMU Accession Issues in Baltic Countries," Eastward Enlargement of the Euro-zone Working Papers wp17a, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 May 2003.
    7. Artis, Michael J & Marcellino, Massimiliano & Proietti, Tommaso, 2004. "Characterizing the Business Cycle for Accession Countries," CEPR Discussion Papers 4457, C.E.P.R. Discussion Papers.
    8. Willem H. Buiter & Clemens Grafe, 2002. "Ancorare, fluttuare o abbandonare la nave:i regimi valutari dei paesi candidati all' Unione Europea," Moneta e Credito, Economia civile, vol. 55(218), pages 127-164.
    9. Dobrescu, Emilian, 2004. "Economia Romaniei in perioada 2003-2010: Estimari de macromodel [Romanian economy during 2003-2010: Macromodel estimations]," MPRA Paper 35768, University Library of Munich, Germany.
    10. Georgi Chukalev, 2002. "The Balassa-Samuelson Effect in the Bulgarian Economy," Working paper series 22002en, Agency for Economic Analysis and Forecasting.
    11. Sandrine Levasseur, 2004. "Why not euroisation?," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 121-156.
    12. Emilian Dobrescu, 2015. "Comparative Price Level (Cpl) – A Representative Parameter of Economic Convergence," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 7-28, December.
    13. Kaloyan Simeonov, 2007. "Inflation Challenge to Bulgaria and Eurozone Membership," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 80-98.
    14. Sõrg, Mart, 2004. "Estonian Monetary System: Reconstruction, Performance, and Future Prospects," Wirtschaftswissenschaftliche Diskussionspapiere 11/2004, University of Greifswald, Faculty of Law and Economics.
    15. repec:spo:wpecon:info:hdl:2441/3361 is not listed on IDEAS
    16. Eduard Hochreiter, 2001. "Exchange Rate Policy in the Run-up to EMU - The Austrian Experience," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(2), pages 19-23, October.
    17. Mart Sırg, 2005. "Estoniaís Accession to the EMU," Working Papers 133, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
    18. Andreas Grünbichler & Patrick Darlap & Sinikka Salo & Leslie Lipschitz & Timothy Lane & Alex Mourmouras, 2004. "Supervisory Systems, Fiscal Soundness and International Capital Movement: More Challenges for new EU Members," SUERF Studies, SUERF - The European Money and Finance Forum, number 2004/1 edited by Morten Balling, December.
    19. Eduard Hochreiter, 2001. "Exchange Rate Policy in the Run-up to EMU - The Austrian Experience," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(02), pages 19-23, October.
    20. Edgar Feige & James Dean, 2002. "Dollarization and Euroization in Transition Countries: Currency Substitution, Asset Substitution, Network Externalities and Irreversibility," International Finance 0205003, University Library of Munich, Germany.
    21. Clement van de Coevering, 2003. "Structural convergence and monetary integration in Europe," MEB Series (discontinued) 2003-20, Netherlands Central Bank, Monetary and Economic Policy Department.
    22. Buiter, Willem H. & Grafe, Clemens, 2002. "Patching up the Pact: some Suggestions for Enhancing Fiscal Sustainability and Macroeconomic Stability in an Enlarged European Union," CEPR Discussion Papers 3496, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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