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Pegging To The Dollar And The Euro



The newly-launched euro is bound to attract some "trackers"- that is, countries that attempt to maintain exchange rate stability against the euro. In this paper, we ask whether the existence of trackers should be a matter of concern for the European Union. To gain some insight, we review the historical experience of the US with respect to dollar trackers. We identify and analyse the countries most likely to track the euro. Although the aggregate size of potential euro-trackers is small relative to the euro zone, we argue that this does not justify an attitude of benign neglect. Rather, we make recommendations for EU policy towards euro-trackers, arguing in favour of some limited and conditional support for stable bilateral exchange rates.

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  • Lane, P & Honohan, P, 1999. "Pegging To The Dollar And The Euro," Trinity Economics Papers 996, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:996

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    Cited by:

    1. Kawai, Masahiro & Akiyama, Shigeru, 2000. "Implications of the currency crisis for exchange rate arrangements in emerging East Asia," Policy Research Working Paper Series 2502, The World Bank.
    2. Kenen, Peter B., 2000. "Currency areas, policy domains, and the institutionalization of fixed exchange rates," LSE Research Online Documents on Economics 20170, London School of Economics and Political Science, LSE Library.
    3. Iikka Korhonen & Mare Randveer, 2015. "Assessment of the Euros's implications for European economic development," Bank of Estonia Working Papers wp2000-02, Bank of Estonia, revised 03 Feb 2015.
    4. Philip Lane & Sébastien Wälti, 2006. "The Euro and Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp139, IIIS.
    5. Joao Loureiro & Manuel m.f. Martins & Ana paula Ribeiro, 2010. "Cape Verde: The Case For Euroisation," South African Journal of Economics, Economic Society of South Africa, vol. 78(3), pages 248-268, September.
    6. Lane, Philip R., 2005. "Global bond portfolios and EMU," Working Paper Series 553, European Central Bank.
    7. Masahiro Kawai & Shinji Takagi, 2012. "A Proposal for Exchange Rate Policy Coordination in East Asia," Chapters,in: Monetary and Currency Policy Management in Asia, chapter 9 Edward Elgar Publishing.
    8. Devereux, Michael B. & Lane, Philip R., 2003. "Understanding bilateral exchange rate volatility," Journal of International Economics, Elsevier, vol. 60(1), pages 109-132, May.
    9. Philip R. Lane & Gian Maria Milesi-Ferretti, 2007. "Europe and global imbalances," Economic Policy, CEPR;CES;MSH, vol. 22, pages 519-573, July.
    10. Michael B. Devereux & Philip R. Lane & Juanyi Xu, 2006. "Exchange Rates and Monetary Policy in Emerging Market Economies," Economic Journal, Royal Economic Society, vol. 116(511), pages 478-506, April.
    11. Patrick Honohan & Philip R. Lane, 2003. "Divergent inflation rates in EMU," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 357-394, October.
    12. Philip R. Lane, 2006. "Global Bond Portfolios and EMU," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May.
    13. Philip Lane, 2013. "International Capital Flows and Domestic Financial Conditions: Lessons for Emerging Asia," The Institute for International Integration Studies Discussion Paper Series iiisdp438, IIIS.
    14. Cotter, John, 2000. "Volatility and the Euro: an Irish perspective," MPRA Paper 3535, University Library of Munich, Germany.
    15. Kawai, Masahiro & Takagi, Shinji, 2000. "Proposed strategy for a regional exchange rate arrangement in post-crisis East Asia," Policy Research Working Paper Series 2503, The World Bank.

    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission


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