Chapter 5: Monetary Policy Challenges for Turkey in the European Union Accession Process
Fatih Özatay* 5.1 INTRODUCTION After being oﬃcially recognized as a candidate state at the Helsinki European Council, the Turkish government announced its own National Programme for the adoption of the acquis communautaire on 19 March 2001. A turning point towards full membership came on 17 December 2004, when a date for starting the membership negotiations was given to Turkey. According to the Treaty Establishing the European Community, the economic and monetary integration process consists of three phases. The ﬁrst phase covers the period of candidacy for the European Union (EU). In this phase, the candidate countries choose their own monetary policy and exchange rate policy. However, they have to make necessary changes in their legislation to ensure central bank independence. The second is the accession phase and starts with EU membership. This phase consists of two stages: the period before joining the Exchange Rate Mechanism of the European Monetary System (ERM II) and the ERM II period. ERM II membership can take place any time after EU accession. It is an exchange rate arrangement with ﬁxed but adjustable central parities and a ﬂuctuation band of Ϯ15 per cent. The minimum period of ERM II membership is two years prior to the convergence assessment. In the ﬁnal phase, member countries are expected to join the European Monetary Union (EMU) and adopt the euro.1 In this chapter, the EU accession process is analysed from the perspective of monetary policy. Problems that can be faced by the monetary authorities after becoming a...
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