Symposium on Exchange Rate Regimes in Transition Economies. The Euroization Debate—Introduction

Ever since its inception in 1957 the European Union has been engaged in successive rounds of both widening—from six to fifteen members—and deepening, from sectoral co-operation to Customs Union, then to a Common Market and a deeper Single Market, then to a single currency, the euro. The current round of EU enlargement to the east, however, is very much different from the earlier four rounds. It is large scale, involving twelve prospective entrants (including Cyprus and Malta), adding one-third to the EU population and only about 5 per cent to EU income. The ten east European candidates are engaged in a profound, complex and unprecedented transformation from a Soviet-type system to a market economy; they are also undertaking a painful restructuring of their productive capacity. Convergence to EU standards—monetary/fiscal, real, and above all institutional—is slow and incomplete, and the enlargement process is both delayed and excruciatingly slow. Parallel monetary unification in the EU is also a slow motion and partial process, moreover out of sequence in that it precedes instead of follows political unification in Europe.