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Towards ERM2: managing the relationship between the euro and the other currencies of the European Union

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  • F. SACCOMANNI

    (Banca d'Italia)

Abstract

The Exchange Rate Mechanism 2 (ERM2) framework promises a stronger and closer relationship between the euro and potential non-euro members of the EU. The central factor of the relationship will depend on the progress of the economic convergence of participating countries. ERM2 provides for a suspension of intervention and financing by the European Central Bank (ECB) and non-euro banks during price stabilisation. It clearly indicates an exchange rate objective that is geared towards non-inflationary economic and monetary policies. An examination is undertaken of how best to organise monetary and exchange rate policy cooperation between the euro area and these other EU countries.

Suggested Citation

  • F. Saccomanni, 1996. "Towards ERM2: managing the relationship between the euro and the other currencies of the European Union," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 49(199), pages 385-403.
    • Handle: RePEc:psl:bnlqrr:1996:41
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10616/10500
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    References listed on IDEAS

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    1. Portes, Richard, 1996. "Implementing EMU," American Economic Review, American Economic Association, vol. 86(2), pages 139-142, May.
    2. Kenen,Peter B., 1995. "Economic and Monetary Union in Europe," Cambridge Books, Cambridge University Press, number 9780521558839, October.
    3. Barry Eichengreen & Charles Wyplosz, 1993. "The Unstable EMS," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1), pages 51-144.
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    Cited by:

    1. Francesco Papadia & Gian Ruggiero, 1999. "Central Bank Independence and Budget Constraints for a Stable Euro," Open Economies Review, Springer, vol. 10(1), pages 63-90, February.
    2. McCauley, R.N., 1997. "The Euro and the Dollar," Princeton Essays in International Economics 205, International Economics Section, Departement of Economics Princeton University,.
    3. van Aarle, Bas & Garretsen, Harry & van Moorsel, Cornelie, 2001. "Internal and external transmissions of monetary and fiscal policies in the EMU," Economic Systems, Elsevier, vol. 25(2), pages 127-148, June.
    4. Robert McCauley, 1999. "The Euro and the Dollar, 1998," Open Economies Review, Springer, vol. 10(1), pages 91-133, February.

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    More about this item

    Keywords

    Foreign Exchange & Reserves Policy; Laws; regulations and rules; Eurocurrency market;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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