Abstract
Two issues are discussed. The first is which countries might benefit from entry into EMU before the millennium. Germany and her immediate neighbors appear the most likely to benefit; however, our knowledge is too uncertain to say whether all, some, or no countries would reap economic benefits. The second issue is how to avoid exchange rate instability in the transition to EMU. Experience from earlier exchange rate regimes suggests that an early announcement the parities at which different currencies would enter EMU could reduce such instability if governments were willing to accept the required limitations on domestic policies.
The author would like to thank, without implication, the participants in the workshop and in particular the two discussants Messrs. Gros and Icard, for useful comments. Thanks are also due to Barry Eichengreen, Donogh MacDonald, and Peter Clark for their comments. This paper does not necessarily reflect the views of the IMF.
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Bayoumi, T. (1996). Who Needs Bands? Exchange Rate Policy before EMU. In: Alders, J.A.J.K., Koedijk, K.G.K., Kool, C.J.M.C., Winder, C.C.M.C. (eds) Monetary Policy in a Converging Europe. Financial and Monetary Policy Studies, vol 31. Springer, Boston, MA. https://doi.org/10.1007/978-1-4613-1249-9_6
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DOI: https://doi.org/10.1007/978-1-4613-1249-9_6
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