Options for the Future Exchange Rate Policy of the EMU. PDF Download

Author:
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 48

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Author: David K. Begg
Publisher:
ISBN:
Category :
Languages : en
Pages : 30

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Author: Markus Bruetsch
Publisher: GRIN Verlag
ISBN: 3638201465
Category : Business & Economics
Languages : en
Pages : 25

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Essay from the year 2003 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,4 (A), Oxford Brookes University (Business School), course: International Investment & Finance, language: English, abstract: Since the euro has been introduced as the common currency of the European Monetary Union (EMU) exchange rate policy-making has not been noticeably mentioned on the agenda of the European Central Bank (ECB). This work examines and explains the development of the euro since its introduction in 1999. A discussion of possible exchange rate regimes, their impacts on domestic and international trade and living standards, as well as a brief introduction on market intervention will put forward a recommendation to the ECB for its future exchange rate policy. Since most of the past currency crises emerged from monetary systems of fixed exchange rates, empirical data suggests a non fixed external regime to the EMU, even more since this allows a range of steering and counteracting opportunities. Following the Keynesian monetary theory, the forces of supply and demand are not always sufficient to guarantee a stable and sound economic environment for successful trade and growth. Therefore a free floating system of exchange rates might not be the right way for the ECB to follow its aim of price stability and competitiveness in a highly integrated area as the EU. We recommend employing an external managed floating system at a reasonably high level of currency value, i.e. purchasing power, depending on the situation of employment and export-import balance. The ECB should carefully carry out market interventions, limited by international exchange rate agreements, e.g. by the G-10 Nations summits.

Author: Mr.Paul R. Masson
Publisher: International Monetary Fund
ISBN: 1451972644
Category : Business & Economics
Languages : en
Pages : 26

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The more advanced Central and Eastern European Countries (CEECs) face an evolving set of considerations in choosing their exchange rate policies. On the one hand, capital mobility is increasing, and this imposes additional constraints on fixed exchange rate regimes, while trend real appreciation makes the combination of low inflation and exchange rate stability problematic. On the other hand, the objectives of EU and eventual EMU membership make attractive a peg to the euro at some stage in the transition. The paper discusses these conflicting considerations, and considers the feasibility of an alternative monetary framework, inflation targeting.

Author: Mr.Tamim Bayoumi
Publisher: International Monetary Fund
ISBN: 1451846282
Category : Business & Economics
Languages : en
Pages : 20

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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 gain; however, our knowledge is too uncertain to say whether all, some, or no countries would reap net 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.

Author: Mr.George Kopits
Publisher: International Monetary Fund
ISBN: 1451842570
Category : Business & Economics
Languages : en
Pages : 42

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Book Description
In view of the requirements of Stage 2 of European Monetary Union (EMU) for accession to the European Union, this paper examines the desirability for, and the ability of, the lead candidates in Central and Eastern Europe to participate in the new exchange rate mechanism (ERM2) and eventually in EMU. For most of these countries the benefits are likely to outweigh the cost of participation. After successfully meeting the basic conditions (wage flexibility, prudent fiscal and monetary stance, financial system soundness) for ERM2, each candidate should be able to shadow the euro, with sufficient flexibility around the central rate, prior to formal participation. The paper concludes with a discussion of two policy dilemmas.

Author: Zhaohui Chen
Publisher: World Scientific
ISBN: 9814499161
Category : Business & Economics
Languages : en
Pages : 218

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Book Description
This volume is a collection of classical and recent empirical studies of currency options and their implications for issues of exchange rate economics, such as exchange rate risk premium, volatility, market expectations, and credibility of exchange rate regimes. It contains applications on how to extract useful information from option market data for financial forecasting policy purposes. The subjects are discussed in a self-contained, user-friendly format, with introductory chapters on currency option theory and currency option markets.The book can be used as supplementary reading for graduate finance and international economics courses, as training material for central bank and regulatory authorities, or as a reference book for financial analysts.

Author: Michael Emerson
Publisher:
ISBN: 9780198773245
Category : Business & Economics
Languages : en
Pages : 356

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The European Community is negotiating a new treaty to establish the constitutional foundations of an economic and monetary union in the course of the 1990s. This study provides the only comprehensive guide to the economic implications of economic and monetary union. The work of an economist inside the Commission of the European Community, it reflects the considerations influencing the design of the union. The study creates a unique bridge between the insights of modern economic analysis and the work of the policy makers preparing for economic and monetary union.

Author: Richard Friberg
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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This paper attempts to review the argument that EMU leads to benefits from lower exchange rate uncertainty. Two questions are addressed. First, there is the microeconomic question of how exchange rate uncertainty affects firms. Second, there is the macroeconomic question of how EMU affects uncertainty. Most of the paper is devoted to the first question. For instance, we study correlations between exchange rates on the one hand and stock prices and output prices on the other. The following facts speak against the idea that EMU will be beneficial for Swedish firms: firms can adjust to exchange rate uncertainty, for instance by pricing-to-market; exchange rate changes may work as "automatic stabilizers;" there is no strong empirical evidence that exchange rate uncertainty hampers trade, investment or growth; and important Swedish trading partners, like the U.S., the U.K. and Denmark, are not likely to participate in the monetary union in the near future. For EMU speak the facts that exchange rate uncertainty stems from policy uncertainty, which may be lower inside EMU; that EMU may lower protectionist pressures; and, in particular, that it is very hard for firms to hedge against total economic exchange rate risk (as opposed to mere transaction risk).

Author: Ruth Pitchford
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 308

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Book Description
The introduction from leading academic Christopher Taylor looks at the origins, aims and politics of EMU, while the core of the book comprises detailed analyses by specialist Reuters correspondents based in the world's major financial centres.