Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 13: The accession economies' rocky road to the euro
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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