Exchange Rate Strategies towards EMU for Accession Countries with Currency Boards
This paper investigates the transition of the EU candidate countries with a currency board arrangement (CBA) to the euro-zone. The arguments for and against retaining a CBA while participating in the Exchange Rate Mechanism of the EU (ERMII) are discussed. Then, we show in the framework of a signalling model that abandoning a CBA and allowing the exchange rate to fluctuate within the bands of ERMII can signal to markets the sustainability of nominal convergence and, hence, diminish uncertainty in the pre-accession period and increase the probability of being accepted into the eurozone.
|Date of creation:||15 Oct 2004|
|Date of revision:|
|Contact details of provider:|| Postal: Via dei Roccettini, 9 - I-50016 San Domenico di Fiesole|
Web page: http://www.eui.eu/RSCAS/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:erp:euirsc:p0135. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valerio PAPPALARDO)
If references are entirely missing, you can add them using this form.