Who Needs Bands? Exchange Rate Policy Before Emu

Author/Editor:

Tamim Bayoumi

Publication Date:

April 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1995/043

Subject:

English

Publication Date:

April 1, 1995

ISBN/ISSN:

9781451846287/1018-5941

Stock No:

WPIEA0431995

Pages:

20

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