scholarly journals The triangle of impossibility versus possible modifications of the Polish exchange rate regime during the preparations for the Euro currency’s adoption

Equilibrium ◽  
2009 ◽  
Vol 3 (2) ◽  
pp. 27-37
Author(s):  
Małgorzata Madrak-Grochowska
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Currency Board ◽  
Convergence Criteria ◽  
Currency Market ◽  
National Bank ◽  
Managed Floating ◽  
Economic Stabilization ◽  
Rate Mechanism

The main objective of this paper is to analyze whether and how the Polish exchange rate regime should be modified before Zloty’s adoption to European Rate Mechanism II (ERM II). Possible solutions (it means: currency board, managed floating and adjustable peg) are presented as different nodes of the triangle of impossibility. The conducted research leads to the conclusion that neither currency board nor dirty floating can provide appropriate base for the calculation of the Zloty/Euro central rate. It seems the temporary introduction of adjustable peg, which allows to adjust Polish exchange rate regime to the rules of ERM II in gradual way would be the best solution. Moreover, this option provides The National Bank of Poland with the ability to intervene with the currency market in order to achieve economic stabilization. However, adjustable peg is a good solution for our country as long as both monetary and fiscal authorities cooperate and unify their policy regarding entering the ERM II. Only then can Poland meet all of the convergence criteria.

Exchange Rate Regimes and Economic Stability

2010 ◽  
pp. 29-43
Author(s):  
S. Smirnov
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Real Sector ◽  
Economic Stability ◽  
Exogenous Shocks ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

Chancen und Risiken einer Dollarisierung in Argentinien

2003 ◽  
Vol 52 (1) ◽  
Author(s):  
Ralph Setzer
Keyword(s):  
Exchange Rate ◽  
Financial Integration ◽  
Exchange Rate Regime ◽  
The United States ◽  
Optimum Currency Area ◽  
Currency Board ◽  
Currency Area ◽  
International Investors ◽  
Strong Candidate ◽  
Optimum Currency

AbstractThe collapse of the Argentinean Currency Board revived the debate about the optimal exchange rate regime for Argentina. Given its large exposure to nervous international investors, Argentina is a strong candidate for dollarization, which could provide lower inflation and higher financial integration with the United States. However, Argentina’s poor qualifications for a fixed exchange rate under the traditional optimum currency area criteria and the absence of adequate labor market and fiscal policy structures indicate that dollarization would suffer from the same problems as the Currency Board system. Thus, dollarization, in advance of other fundamental reforms seems a risky strategy.

Doubts about graft could mar Bulgaria’s euro bid

2020 ◽  
Keyword(s):  
Exchange Rate ◽  
Sovereign Debt ◽  
Convergence Criteria ◽  
Content Type ◽  
Euro Adoption ◽  
Exchange Rate Mechanism ◽  
Investment Grade ◽  
Positive Outlook ◽  
Financial Environment ◽  
Rate Mechanism

Subject Bulgaria’s moves towards euro adoption. Significance Bulgaria wants to participate in the EU’s Exchange Rate Mechanism (ERM II), which fixes non-euro currencies against the euro within a fluctuation band. Problem-free participation for at least two years is one of the convergence criteria for eventually entering the euro-area. Bulgaria’s motivation is mostly political: to align the country, geographically and economically on the EU’s periphery, with core EU institutions and gain a place at the negotiating table as the post-Brexit EU faces major changes. Impacts All three major ratings agencies class Bulgarian sovereign debt as investment grade (albeit the second-lowest grade) with positive outlook. There are doubts whether Bulgaria can qualify to join the euro within the minimum two years. There is opposition to euro adoption from some shadowy groups preferring a less-regulated, more loosely supervised financial environment. Circles seeking to weaken EU influence and bring Bulgaria closer to Russia will step up efforts to thwart the process.

scholarly journals Foreign currency regimes

2004 ◽  
Vol 47 (3-4) ◽  
pp. 233-248
Author(s):  
Duska Gajic
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Currency Union ◽  
Final Conclusion ◽  
Currency Board ◽  
Target Zone ◽  
Advantages And Disadvantages ◽  
Theoretical Analyses ◽  
Negative Outcome

There is no exchange rate regime that can be declared as the best one. Each regime has both advantages and disadvantages. In some situations, a regime can be very positive and in an other, it may have rather negative outcome. In the theory, regimes are classified as follows: currency union, currency board, "truly fixed", adjustable peg, crawling peg, basket peg, target zone, dirty float, free float. This paper addresses "fixed vs. flexible regime" issue and provides description of all the requirements, consequences, benefits, weaknesses and possibilities related to them. The final conclusion is that flexible regimes are more frequently used and preferred by most economists. After all theoretical analyses, policymakers are those who make decisions about the optimal exchange rate regime for the economy concerned.

ERM II

2020 ◽  
Author(s):  
Ulla Neergaard
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Euro Area ◽  
Economic And Monetary Union ◽  
Convergence Criteria ◽  
Member States ◽  
The Third ◽  
Exchange Rate Mechanism ◽  
Third Phase ◽  
Rate Mechanism

From the very beginning, an essential cornerstone of the Economic and Monetary Union (EMU) has been the European Exchange Rate Mechanism II (ERM II). It has been in force since 1 January 1999, ie from the initiation of the third phase of the EMU. Its overall purpose is to link currencies of Member States outside the euro area to the euro. Its importance lies in the fact that aspiring Member States must first join the mechanism for at least two years before being admitted as members of the euro area, as ERM II ‘membership’ is one of the four convergence criteria, which are required to be fulfilled for a Member State’s eventual adoption of the euro.

scholarly journals Monetary Policy Analysis in Serbia

2015 ◽  
Vol 4 (3) ◽  
pp. 147-180 ◽  
Author(s):  
Vesna Martin
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Policy Instruments ◽  
Exchange Rate Policy ◽  
Floating Exchange Rate ◽  
National Bank ◽  
Main Regulator

Abstract The paper focuses on analysing monetary policy in Serbia. The National Bank of Serbia chose inflation targeting, which sets price stability as the main objective of monetary policy. To achieve this goal, the central bank uses different monetary policy instruments which analysis can provide us with the understanding of the main directions of their actions but also of the limitations of its application. Only through improvement of both instruments and monetary policy the central bank will create a better foundation for achieving monetary stability. In addition, the implementation of exchange rate policy is entrusted to the National Bank of Serbia, as the main regulator of the financial system. A mere use of managed floating exchange rate, as the chosen exchange rate regime, is an appropriate solution in the current economic circumstances and in accordance with the desired objective of monetary policy.

scholarly journals Accession to the Eurozone as Lithuania’s exit strategy from the currency board system

Equilibrium ◽  
2015 ◽  
Vol 10 (3) ◽  
pp. 27
Author(s):  
Dorota Żuchowska
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Policy ◽  
Currency Board ◽  
Convergence Criteria ◽  
Exit Strategy ◽  
Rate System ◽  
Starting Point ◽  
Rate Policy ◽  
Exchange Rate System ◽  
Board System

In the years 2004-2014 the Lithuania’s exchange rate policy was based on a rigid currency board system. After a period of uncontested success in the fight against inflation in the first decade of the transition and economic growth, entering the ERM II in 2004 and efforts to adopt the euro were treated as an optimal exit strategy from the currency board system. However, the consequences of this exchange rate system in the following years (until 2014) prevented Lithuania from meeting the economic convergence criteria. The starting point for the research is based on the theoretical analysis of literature studying benefits and risks associated with the use of the currency board system by the monetary authorities. The empirical analysis refers to the case of Lithuania and covers the years 2004-2014. The purpose of this analysis is to look at the effects of the use of the currency board system from the perspective of the convergence criteria of monetary nature and the extent of their implementation in the absence of opportunities for autonomous monetary policy.

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