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Who Needs Bands? Exchange Rate Policy Before Emu

Author

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  • Mr. Tamim Bayoumi

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 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.

Suggested Citation

  • Mr. Tamim Bayoumi, 1995. "Who Needs Bands? Exchange Rate Policy Before Emu," IMF Working Papers 1995/043, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/043
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=1339
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    Cited by:

    1. W.H. Buiter, 1995. "Macroeconomic Policy During a Transition to Monetary Union," CEP Discussion Papers dp0261, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    WP; exchange rate; government; country; European monetary union; currency; private exchange rate market; gold standard; exchange rate peg; inadvisable government policy; exchange rate parity; exchange rate band; government demand; exchange rate tension; Exchange rates; Currencies; Exchange rate arrangements; Exchange rate policy; Conventional peg; Western Europe;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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