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
Date Written: August 1, 2005
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: Suggested Citation