Table of Contents

Financial and Monetary Integration in the New Europe

Financial and Monetary Integration in the New Europe

Convergence Between the EU and Central and Eastern Europe

Edited by David G. Dickinson and Andrew W. Mullineux

Potential new entrants to the European Union from Central and Eastern European countries face many challenges to achieve financial convergence with the existing EU nations. Using detailed case studies from Bulgaria, the Czech Republic, Latvia, Lithuania and Poland and analysis of cross country data from these regions, Financial and Monetary Integration in the New Europe looks at the key issues for applicant countries as they negotiate the terms of their membership in the European Union. Of major concern to these countries is the financial sector and its implications for economic growth and the conduct of macroeconomic policy. The book examines, in particular, monetary and exchange rate policies, banking regulation and financial market efficiency. The overall impact of building a market driven financial system on economic development is also explored.

Chapter 1: Financial integration between the EU and the economies of Central and Eastern Europe: an overview

David G. Dickinson and Andrew W. Mullineux

Subjects: economics and finance, financial economics and regulation

Extract

David G. Dickinson and Andrew W. Mullineux INTRODUCTION The development of the financial sector and its implications for economic growth and the conduct of macroeconomic policy is an issue of major concern for the Central and Eastern European (CEE) countries as they negotiate the terms of their membership of the European Union (EU). This introduction reports work carried out by a team of researchers in both the EU and Central and Eastern Europe which forms the basis for the remaining chapters. It contains analysis of a number of key issues related to the financial sector. The broad themes addressed are: the conduct of monetary policy and the exchange rate regime during a period of financial liberalization; and the impact of increasing convergence of the financial systems of the CEE countries with those in the EU. BACKGROUND This section briefly reviews the economic and policy-making background from which CEE countries are moving on towards EU membership. Overall the transition economies of Central and Eastern Europe have made great strides in their economic transformation towards market-based economies. Following the early stage transition recessions, most have experienced significant economic growth, although at least some of this will come from the quality and range of goods on offer rather than from increased production. As ÿ reported by Steinbuka (Chapter 6, Table 6.2) we may observe, for example, that during the 1993Ð97 period, the Czech Republic experienced growth in GDP per capita (at current prices and exchange rates) of about 65 per cent, in Poland...

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