Exchange Market Pressure Before Entering the ERM II - the Case of Central European Countries
Author:Assistant Professor Ing. Daniel Stavarek, Ph.D.
JEL:
DOI:
Keywords:Exchange market pressure;
• ERM II;
• Convergence criteria;
• New EU-members.
Abstract:
This paper estimates the exchange
market pressure in four Central European
countries which are also new member of
the European Union - Czech Republic,
Hungary, Poland and Slovenia. As all new
EU-member countries are supposed to join
the European Economic and Monetary
Union soon, they must pay attention on
fulfilling of all convergence criteria. One
of the criterions deals with exchange rate
stability and is associated with
membership in the Exchange Rate
Mechanism II. Estimation and analysis of
exchange market pressure are extremely
important since almost all new EUmembers
will be forced to switch their
relatively flexible exchange rate regime to
the ERM II which is considered as quasifixed.
This paper reveals a significance of
exchange market pressure in all types of
exchange regime arrangement in all
countries analyzed. The paper concludes
that exchange market pressure achieved
the highest level in fixed pegs regimes and
the volatility of exchange market pressure
was lowest in the floating regimes.