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The Economic Potential of a Larger Europe

The Economic Potential of a Larger Europe

Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald

The Economic Potential of a Larger Europe gives insights into past, present and future issues related to the ongoing EU enlargement process. Providing a unique forum for debate and a multiplicity of views and experiences from both high-profile academics and those who engage with enlargement on an implementation level, this book covers a wide range of topics that are key to a successful transition and integration process and thus to the provision of a prosperous growth environment within a larger Europe. Special attention is paid to monetary integration, notably entry into ERM II, on which representatives of the national central banks involved present their views.

Chapter 13: The accession economies' rocky road to the euro

Barry Eichengreen


13. The accession economies’ rocky road to the euro Barry Eichengreen1 Now that the decision has been reached to admit to the European Union eight of what were once called the transition economies, attention has naturally turned to whether these countries should also adopt the euro. But whereas there is a consensus that joining the EU, while posing certain difficulties, will be a source of net benefits, there is no such consensus about the consequences of monetary union. In part this reflects the unusual difficulty that monetary economists have in translating theory into policy. We specialists, in other words, cannot even agree amongst ourselves. In this chapter I suggest that this uncertainty is unwarranted. Adopting the euro is clearly superior to the other monetary options available to the new EU members. These countries are right to be committed to joining the euro area as soon as possible. And the incumbent members of the euro area should be happy to have them. To be sure, enlarging the monetary union will pose difficulties for both the incumbents and the new members. But these are minor compared to the difficulties that will arise under other scenarios. From this point of view, it is regrettable that the incumbents appear to be placing unnecessary obstacles in the path of the aspirants. 1. OPTIONS On 1 May 2004 the ten new member states of the European Union will join EMU with a derogation (that is, they will not be obliged...

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