EMU strategies for new Member States: the role of Exchange Rate Mechanism II

19 Pages Posted: 15 Jul 2022

Date Written: July 1, 2004

Abstract

This paper examines the role of ERM II in the convergence effort of the new Member States, against the background of past convergence experience and in the light of EU rules for economic and monetary policy. Key aspects of the mechanism are analysed, including the appropriate timing and duration of participation in ERM II, intervention in the foreign exchange markets to defend central rates, fiscal adjustment as well as exit strategies from existing regimes. It emerges from the analysis that ERM II rules are flexible enough to accommodate a number of new Member States’ exchange rate regimes and that both exchange-rate-based monetary regimes as well as inflation targeting regimes can lead to a successful outcome, if accompanied by sound economic and fiscal policies.

Keywords: EU enlargement, EMU, ERM II

JEL Classification: E52, E61, F32

Suggested Citation

Submitter, Bank of Greece and Papaspyrou, Theodoros, EMU strategies for new Member States: the role of Exchange Rate Mechanism II (July 1, 2004). Bank of Greece Economic Bulletin, Issue 23, Article 1, Available at SSRN: https://ssrn.com/abstract=4163636

Bank of Greece Submitter

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Theodoros Papaspyrou (Contact Author)

Bank of Greece

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

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