Economic stability and choice of exchange rate regimes

Arbeitspapier

The purpose of this paper is to emphasize the importance of Europe's structural problems and governance as the cause of the current euro area crisis. The euro may have led to bubbles, but member economies were not free of trouble before the euro. Many members were losing competitiveness and in need of removing structural rigidities. If anything, the euro was expected to encourage structural reform, by taking away the easy choice of monetary and fiscal expansion. We first discuss the relationship between the single currency and economic stability in Europe. We confirm the asymmetries that remained after the introduction of the euro and then discuss the governance overhaul taking place in Europe today. This overhaul was something that should have been done before introducing the euro, and its advancement may be the silver lining of this crisis. Finally, we touch upon the implications for Asia and Japan, from the point of view of the choice of exchange rate regime as a method to advance necessary reforms.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 408

Classification and Topics

• Classification: Wirtschaft ; International Monetary Arrangements and Institutions ; Open Economy Macroeconomics
• Subject: single currency ; europe ; euro area crisis ; economic stability ; exchange rate regimes ; Euro ; Eurozone ; Haushaltsdefizit ; Entwicklungskonvergenz ; Wechselkurssystem ; EU-Staaten ; Vergleich ; Japan ; Asien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kaji, Sahoko
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/101200