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The international integration of money markets in the central and east European accession countries: deviations from covered interest parity, capital controls and inefficiencies in the financial sector

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  • Jochem, Axel
  • Herrmann, Sabine

Abstract

Based on the concept of covered interest parity it is shown that the money markets in Poland, the Czech Republic, Hungary, and the Slovak Republic meanwhile display a high degree of international integration with the euro area. Integration has strengthened continuously in the review period of 1999 to mid 2002. The segmentation that could still be observed stems from both restrictions on the short-term movement of capital and the limited development of the financial sectors in the four accession countries. While almost all capital controls have since been removed and will no longer play a role after accession to the EU, the implementation and transmission of the single monetary policy within the Eurosystem will possibly be impeded, if the financial sectors in CEE are then still underdeveloped.

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  • Jochem, Axel & Herrmann, Sabine, 2003. "The international integration of money markets in the central and east European accession countries: deviations from covered interest parity, capital controls and inefficiencies in the financial secto," Discussion Paper Series 1: Economic Studies 2003,07, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:4203
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    2. Oksana Omelchenko & Oleksandr Dorokhov & Oleg Kolodiziev & Liudmyla Dorokhova, 2018. "Fuzzy Modeling of the Creditworthiness Assessments of Bank’s Potential Borrowers in Ukraine," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 100-125.
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    4. Sandrine Levasseur, 2004. "Why not euroisation?," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 121-156.
    5. von Furstenberg, George M., 2004. "The Contribution of Rapid Financial Development to Asymmetric Growth of Manufacturing Industries: Common Claims vs. Evidence for Poland," Discussion Paper Series 1: Economic Studies 2004,34, Deutsche Bundesbank.
    6. Ferreira, Paulo & Dionísio, Andreia & Zebende, G.F., 2016. "Why does the Euro fail? The DCCA approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 443(C), pages 543-554.
    7. Shkolnyk, Inna & Kozmenko, Olha, 2008. "The peculiarities of the financial market development in Ukraine," MPRA Paper 50849, University Library of Munich, Germany.
    8. Reiner Eichenberger & Sergio Rossi, 2004. "Die Deregulierung der Zentralbanken: Auf zu einem internationalen Markt für gute Geldpolitik!," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 140(III), pages 327-353, September.
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    12. Rossi, Sergio, 2004. "The enlargement of the euro area: what lessons can be learned from EMU?," Journal of Asian Economics, Elsevier, vol. 14(6), pages 947-970, January.
    13. Paulo Ferreira, 2011. "Monetary Integration in the European Union," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 10(1), pages 93-120, April.
    14. Köhler, Matthias, 2005. "International Capital Mobility and Current Account Targeting in Central and Eastern European Countries," ZEW Discussion Papers 05-51, ZEW - Leibniz Centre for European Economic Research.

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