Fiscal and Monetary Policy in the Eurozone by Canale Rosaria Rita;Mirdala Rajmund;

Author:Canale, Rosaria Rita;Mirdala, Rajmund;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2019-02-18T00:00:00+00:00

Table 3.1: Exchange Rate Regimes in New EU Member Countries.

Source: IMF AREAER 1990–2014; author’s processing.

Note: Exchange rate regime evolution in the New EU member countries (based of IMF de jure classification): Bulgaria – since 1991 floating (pegged exchange rate regime undesirable due to possible low credibility), currency board since 1997 (after 1996–1997 financial crisis – public debt, bad commercial banks loans). Czech Republic – exchange rate pegged to currency basket with narrow but continuously widen horizontal bands, since May 1997 after currency attacks switch to managed floating with no predetermined path for the exchange rate with DEM (EUR) as reference currency. Croatia – crawling peg since March 1992 till October 1993, since October 1993 tightly managed floating with no predetermined path for the exchange rate with DEM (EUR) as reference currency. Estonia – currency board since 1992 till 2011 (euro adoption), plan to adopt in 2008 but delayed due high inflation, since 2011 Eurozone membership. Hungary – managed floating till February 1995, since March 1995 till the end of 1999 crawling peg with continuously decreased rate of periodical devaluation and widen horizontal bands, since January 2000 exchange rate pegged to euro combined with wide horizontal bands (since May 2001), since May 2008 managed floating with EUR as reference currency. Latvia – since February 1994 exchange rate pegged to SDR (fixing the exchange rate to a basket of currencies (SDR) instead of a single currency serves to promote long-term stability) (since January 2005 pegged to EUR), since 2014 Eurozone membership. Lithuania – since April 1994 currency board (exchange rate pegged to USD, in February 2002 pegging switched to EUR), since 2015 Eurozone membership. Poland – since the end of 1991 crawling peg with continuously decreased rate of periodical devaluation and widen horizontal bands, since April 2000 free floating. Romania – free floating, since 1998 exchange rate arrangement reclassified as managed floating. Slovak Republic – exchange rate pegged to currency basket with narrow but continuously widen horizontal bands, since October 1998 after currency attacks switch to managed floating with no predetermined path for the exchange rate with DEM (EUR) as reference currency, since 2009 Eurozone membership. Slovenia – managed floating with no predetermined path for the exchange rate (since February 2002 crawling band – the monetary authority manages the float of the domestic currency within certain fluctuating margins around a depreciating path – a heavily-managed crawling band with pragmatic monetary, real, external, and financial indicators). ERM2 – June 2004 – Estonia (left in January 2011 after euro adoption), Lithuania (left in January 2015 after euro adoption), Slovenia (left in January 2007 after euro adoption); – May 2005 – Latvia (left in January 2014 after euro adoption); – November 2005 – Slovak Republic (left in January 2009 after euro adoption).

3.2.1.2. Monetary Targeting. Fixing the exchange rate is not an appropriate strategy for economies, (1) where central banks have low foreign exchange reserves, (2) in which governments fail to implement a prudent and sustainable fiscal policy. Both aspects reduce the credibility of disinflationary monetary policy or the monetary stability, as well as the expected “lifecycle” of fixed rate regime.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.