Focus on Central, Eastern and South-Eastern Europe
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
The end of the 2000s and the beginning of the 2010s was characterized by a severe economic crisis, starting in financial markets and spreading to the entire economy. In such unstable times questions like ‘Which factors have added to instability?’ and ‘What are the stabilizing factors?’ were raised by many an economist or policymaker. In answer to these questions the natural candidates include currencies or exchange rate regimes. Thus, the euro came under close scrutiny, not only with regard to the euro area as such, but also with regard to our neighbouring region, the Central, Eastern and South-Eastern European (CESEE) countries. Among this group of countries, only Slovenia and Slovakia have managed to introduce the euro so far. The others are still on their way, debating the right timing, but also the most appropriate exchange rate regime up-front. These questions are inherent to the enlargement process of the European Union (EU), and are thus anything but new issues. But has the crisis changed the answers? Did we get new insights concerning the right speed and the necessary preconditions for euro adoption? It is not clear if euro adoption will speed up in the near future, or if countries may refrain at least for a while, as they have found the exchange rate instrument to be a valuable tool that helped them survive the crisis relatively well. The answers may depend on the starting point, de facto on the initial exchange rate regime of the countries concerned. Fixed-peg and...