European Monetary Policy: The First Years



The years before the transition to Stage Three of the European Monetary Union (EMU) were a time of hot debates. Economic as well as political chances (and risks) of EMU were discussed quite controversially94. Above all, the proponents pointed to the following prospects and advantages of EMU: (1) Reduced transaction costs, (2) reduced risk premiums because of reduced exchange rate volatility, (3) widening and deepening of capital markets, (4) more transparency with respect to wages and prices, (5) more competition, more trade, (6) lower average inflation rates, (7) reduced costs of lowering inflation rates, (8) higher growth rates and higher employment, and (9) reserve currency advantages.


Monetary Policy Central Bank Euro Area European Central Bank Money Demand 
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© Deutscher Universitäts-Verlag GmbH, Wiesbaden 2003

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