Emilija Beker Pucar

DOI Number
First page
Last page


The paper aims to highlight the main difficulties on the monetary path towards the euro zone experienced by Emerging Europe. Emerging European Economies (EEEs), EU members, adopted either double shift or smooth transition monetary approach towards the euro zone. Double shift assumes changes from floating exchange rate regimes (ERRs) to the ERM II target zone and, finally, monetary union as a rigid ERR. The smooth transition is practiced by economies with mainly rigid ERRs before the ERM II entrance and, at the end, again rigid ERR of a monetary union. Despite chosen monetary path towards the euro zone, crucial difficulties or aggravating factors could be identified in the form of real exchange rate appreciation due to productivity growth or capital inflows. A reconciliation of inflation and exchange rate target zone is extremely complex, at the same time striving not to jeopardize the real convergence. What is stressed here is the vicious cycle between real and nominal convergence as the reason why the ERM II target should be regarded as a “waiting room“ not as a “training room“ in the pre-EMU phase. 


euro zone, emerging European economies, nominal convergence, real convergence, ERM II

Full Text:



Allegret, J-P., & Sallenave, A. (2015). Capital flow bonanzas and monetary policy in emerging Europe: responses to the global financial crisis. Post-Communist Economies, 27, 429-447. doi:

Aizenman, J., Chinn M.D., & Hiro, I. (2013). The ‘impossible trinity’ hypothesis in an era of global imbalances: measurement and testing. Review of International Economics, 21(3), 447-458. doi:

Adahl, M. (2000). Accession countries’ choice of exchange rate system in preparation for EMU.

Backé, P., Thimann, C., Arratibel, O., Calvo-Gonzalez, O., Mehl, A., & Nerlich, C. (2004). The acceding countries’ strategies towards ERM II and the adoption of the euro: An analytical review. ECB Occasional Paper Series 10.

Badura, M., & Segura-Ubiergo, A. (2014). Real exchange rate appreciation in emerging markets: Can fiscal policy help? IMF Working Paper 14/1.

Bakker, B. B. (2017). Exchange rate regimes in emerging Europe. 5th Regional Meeting of Governers, Umag, March 30-31.

Begg, D., Eichengreen, B., Halpern, L., von Hagen, J., & Wyplosz, C. (2003). Sustainable regimes of capital movements in accession countries. CEPR Policy Paper 10.

Belhocine, N., Crivelli, E., Geng, N., Scutaru, T., Wiegand, J., & Zhan, Z. (2016). Taking stock of monetary and exchange rate regimes in emerging Europe. IMF European department paper.

Bofinger, P., & Wollmershäuser, T. (2001). Is there a third way to EMU for the EU accession countries? Economic Systems, 25(3), 253-274.

Bofinger, P. (2005). Exchange rate policies and institutional arrangements in the transition process to European Monetary Union. EUI Working Paper RSCAS 2004/17.

Buiter, W., Corsetti, G., & Pesenti, P. (1998). Interpreting the ERM crisis: country specific and systemic issues. Princeton studies in international finance 84.

Buiter, W., & Grafe, C. (2002). Anchor, float or abandon ship: Exhange rate regimes for the Accession countries. EIB papers 7(2).

De Souza, L. M. V. (2002). Beyond transition: Essays on the monetary integration of the accession countries in Eastern Europe (PhD thesis). Retrieved from

De Broeck, M., & Sløk, T. (2001). Interpreting real exchange rate movements in transition countries. IMF working paper 01/56; BOFIT discussion paper 7/2001.

De Haan, J., Hoeberichts, M., Maas, R., & Teppa, F. (2016). Inflation in the euro area and why it matters. De Nederlandsche bank Eurosystem occasional studies 14-3.

Del Hoyo, J. L. D, Dorrucci, E., Heinz, F. F., & Muzikarova, S. (2017). Real convergence in the euro area: a long-term perspective. ECB occasional paper 203.

Direction Generale Du Tresor Et De La Politique Economique - DGTPE. (2008). Real exchange rate appreciation in the emerging countries. Tresor-Economics, 35, 4.

Żuk, P., Polgar, E. K., Savelin, L., del Hoyo, J. L. D., & König, P. (2018). Real convergence in Central, Eastern and South-Eastern Europe. ECB economic bulletin, issue 3/2018.

Edsel, B. (2007). Win or lose, it’s the policy we choose: comparative economic performance of the inflation targeters. MPRA Paper 2928.

Eijffinger, S. C. W. (2003). Accession countries and ERM II. Briefing Paper on "The conduct of monetary policy and an evaluation of the economic situation in Europe - 3rd quarter 2003 (august 2003)" for the European Parliament.

European Council. (1997). Resolution of the European Council on the establishment of an Exchange-Rate Mechanism in the Third Stage of Economic and Monetary Union. Amsterdam, 16 June 1997(97/C 236/03).

Fahrholz, C. (2003). Strategic exchange-rate policy of accession countries in ERM II. Ezoneplus working paper 14.

International Monetary Fund - IMF. (2015). Central and Eastern Europe: New member states (NMS) policy forum – selected issues. IMF country report 15/98.

Issing, O. (2003). Considerations on monetary policy strategies for accession countries.

De Grauwe, P., & Schnabl, G. (2004). Exchange rate regimes and macroeconomic stability in Central and Eastern Europe. CESifo working paper 1182.

Josifidis, K., Allegret, J-P., & Beker Pucar, E. (2011). Inflation targeting and exchange rate regimes in Serbia and selected transition economies. Eastern European Economics, 49(4), 88-105. doi:

Josifidis, K., Allegret, J-P, & Beker Pucar, E. (2014). Adjustment mechanisms and exchange rate regimes in 2004 new EU members during the financial crisis. Post-Communist Economies, 25(1), 1-17. doi:

Kang, J. S., & Shambaugh, J. C. (2014). Progress towards external adjustment in the euro area periphery and the Baltics. IMF working paper 131.

Onorante, L. (2006). Fiscal convergence before entering the EMU. ECB working paper 664.

Orlowski, L. T. (2001). From inflation targeting to the euro-peg, A model of monetary convergence for transition economies. Economic Systems, 25, 233-251. doi:

Orlowski, L. T. (2005). Monetary policy adjustments on the final passage towards the euro. Center for social and economic research, Warsaw.

Palankai, T. (2015). The introduction of the euro and Central Europe. Economics and Sociology, 8(2), 51-69. doi: 10.14254/2071-789X.2015/8-2/5

Polanski, Z. (2004). Poland and the euro zone enlargement: Monetary policy, ERM II, and other issues.

Rahman, J. (2008). Current account developments in new member states of the European Union. IMF working paper 92.

Schadler, S., Drummond, P., Kuijs, L., Margasova, Z., & van Elkan, R. (2005). “Adopting the euro in Central Europe – challenges of the next step in European integration. IMF occasional paper 234.

Szapary, G. (2001). Transition countries' choice of exchange rate regime in the run-up to EMU membership. Finance & Development, 38(2).

Shelburne, R. C. (2008). Current account deficits in European emerging markets. UNECE discussion paper 2008.2.

Tchorek, G. (2017). Polish exchange rate policy dilemmas in ERM II. Studia Europejskie, 2/2017, 43-67.

Vamvakidis, A. (2008). Convergence in emerging Europe: Sustainability and vulnerabilities. IMF working paper 181.



  • There are currently no refbacks.

© University of Niš, Serbia
Creative Commons licence CC BY-NC-ND
Print ISSN: 0353-7919
Online ISSN: 1820-7804