Exchange rate arrangements in EU accession countries: what are the options?

Meade, Ellen E., Müller-Plantenberg, Nikolas and Pisani, Massimiliano (2002) Exchange rate arrangements in EU accession countries: what are the options? Centre for Economic Performance occasional papers (CEPOP17). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Several countries in eastern Europe may accede to the European Union in about two years time, making them candidates to join Europe's single currency from 2006. Some well-known economists have advocated that countries in eastern Europe adopt the euro now either unilaterally or by prior arrangement with the EU. Such official currency substitution is typically termed ''dollarisation'' or ''euroisation'', and is the most extreme form of a hard peg currency regime. This paper brings together perspectives from a conference ''Dollarisation and Euroisation: Viable Policy Options?'' held at the LSE in May 2002. We discuss a number of issues associated with dollarisation or euroisation, including: the credibility of the monetary regime, the implications for domestic inflation, the importance of other macroeconomic policies, the reversibility of hard peg currency regimes, the outlook of the reserve currency issuer, and the broader context in which dollarisation or euroisation is pursued. Finally, we address some particular issues associated with euroisation for EU accession countries. Euroisation prior to EU accession may help to forestall a speculative attack, but it must be implemented in a way that is consistent with the Maastricht Treaty and does not impede progress toward EMU membership.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2002 The authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
Date Deposited:	22 Jul 2010 14:41
Last Modified:	11 Dec 2024 18:32
URI:	http://eprints.lse.ac.uk/id/eprint/28754

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