"Do not impose a currency crisis on Europe"

In an article Charles Wyplosz asks which exchange rate band should apply to the EU's accession countries aiming to qualify for membership of the euro. The narrow exchange rate mechanism band of 2.25 per cent may apply but the new EU members are mostly transition countries from central and eastern Europe with volatile short-term capital inflows. When these hiccups occur, Wyplosz says, there is a panicked exit of capital and the exchange rate takes a big hit.

First published in the Financial Times

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