EU Enlargement and New Member Countries' Involvement in the Exchange Rates System

Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 23, No. 1, 2005, pp. 167-182

14 Pages Posted: 5 Jun 2013

See all articles by Vlatka Bilas

Vlatka Bilas

University of Zagreb - Faculty of Economics & Business

Date Written: August 1, 2005

Abstract

For each country, joining the union is a unique process, considering advantages and disadvantages which a country can thus obtain. In order to fulfill conditions for the EU accession, transition countries must achieve different convergence criteria. Expansion of the EU brings along many challenges including coordination of policies and conducting a common monetary policy. After joining the EU new members are expected to have a minimum of two years of participation in the Exchange Rate Mechanism 2 before accepting euro. ERM2 can be a flexible and efficient framework for the determination of a appropriate level of irrevocable exchange rate fixing according to euro, as well as for achieving macroeconomic stability. Even though, considering demands for complete abolition of capital controls and high capital mobility, fixed exchange rate with fluctuation margins of ±15% is to become sensitive to the capital movements and speculative attacks.

Note: Downloadable document is in Croatian.

Keywords: monetary union, expansion of EU, ERM, Croatia and EU, euro

JEL Classification: F15, F31

Suggested Citation

Bilas, Vlatka, EU Enlargement and New Member Countries' Involvement in the Exchange Rates System (August 1, 2005). Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 23, No. 1, 2005, pp. 167-182, Available at SSRN: https://ssrn.com/abstract=2273498

Vlatka Bilas (Contact Author)

University of Zagreb - Faculty of Economics & Business ( email )

Trg J. F. Kennedyja 6
Zagreb, City of Zagreb 10000
Croatia

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