When the Prospective Central and Eastern European Members of the EU Will Be Able to Join the Euro's Zone?

Abstract:     
The main objective of this paper is to consider some problems the potential Central and Eastern European Members of the European Union will face before joining ERM II and the euro's area. Their present monetary and exchange rate policies will probably not result in the soonest possible access to Stage 3 of Economic and Monetary Union. This paper presents a view that imminent joining of the ERM II by the post-communist potential members of the EU after enlargement might even cause some complications for them and in consequence delay their access to the euro's area. This paper proposes to introduce currency board arrangement (CBA) to euro as an accession-related adjustment to ERM II and to the euro's area. As a main benefit may be indicated the prospective euroization of their economies and closer links to euro interest rates proven by CBA tied to other currencies in the past. But this requires support from the European Central Bank and the European Commission for such an alternative. The answer for the question formulated in the title will decide about real convergence by CEE countries to the present countries of the EU. It will also allow them sharing benefits from joining the single currency area.

Number of Pages in PDF File: 17

Keywords: Transition Finance, Currency Board, Financial Integration, Central Banking, Foreign Exchange Rate Policy, Currency Area, EMU and Euro

JEL Classification: F36, F33, E58, E63, P34

working papers series