Out in the cold? Outsiders and insiders in 1999: feasible and unfeasible options
Keywords:European Monetary Union, euro, political economy
Article originally published in “European Monetary Union: The Problems a Transition to a Single Currency”, supplement to Banca Nazionale del Lavoro Quarterly Review, n. 196 of March 1996, pp. 137-159. As the ultimate date set for the commencement of the third stage of the European Monetary Union (EMU) and the adoption of the single currency approaches, technical, economic and political problems seem to grow in number and size. This paper focuses on one in particular: the regime governing the relationships between the single currency (or, in stage 3a, between the currencies of the Member States fulfilling the necessary conditions for the adoption of the single currency) and the currencies of the Member States with a derogation. The paper sets out the constraints under which the choice will be made and the costs and benefits of alternative solutions for the Euro-countries (the insiders) and for the less homogeneous group of outsiders. In light of this analysis, the paper sketches a possible solution which may be both institutionally feasible and economically viable.
JEL Codes: D72, F55, N14
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