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Monetary Convergence on the Road to EMU: Conceptual Issues for Eastern Europe


  • Nikolay Nenovsky



Traditional monetary and economic convergence in accordance with the Optimal Currency Areas model has a number of limitations. Above all, it fails to assess the state of formal and informal monetary institutions. Adequate for an industrial society, it does not address the change to a globalising information society, being mainly quantitative, aggregated, and generally mechanical. This removes it from reality, though keeping it close to a quantitative presentation. It fails to take into account invisible threats to convergence and East European country realities involving informal monetary institutions and differences in institutional development. Monetary regime efficiency is judged solely by Maastricht criteria fulfilment. These limitations may be overcome in two ways. The first is to take into account the institutional aspect of money, enabling discussion of institutional monetary convergence. The second way is to adopt institutional monetary competition, allowing at least some institutional competition in EEC monetary regimes in the run up to euro adoption and possibly allowing the euro to circulate in parallel with national currencies.

Suggested Citation

  • Nikolay Nenovsky, 2006. "Monetary Convergence on the Road to EMU: Conceptual Issues for Eastern Europe," ICER Working Papers 35-2006, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:35-2006

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    Cited by:

    1. Nikolay Nenovsky, 2010. "Monetary Regimes In Post-Communist Countries Some Long-Term Reflections," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 57, pages 217-234, november.
    2. Nenovsky, Nikolay & MIlev, Jeko, 2014. "Bulgarian Welfare System (1989 – 2014) During the Transition and the Crisis," MPRA Paper 62039, University Library of Munich, Germany, revised 2014.

    More about this item


    institutional and monetary convergence; Eastern Europe;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General


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