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Central bank independence in Central and Eastern Europe on the eve of EU-enlargement
Freytag, Andreas |
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| The 2004 European Union enlargement is an official marking of the end of the transition period to a market economy for the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Regardless of their current status as accession candidates almost all Central and Eastern European countries are preparing themselves for final membership of the European Monetary and Economic Union (EMU). This paper argues that institutional convergence, in particular central bank independence is equally, if not more, important for a successful common monetary policy in an enlarged Euroland than nominal and real convergence, as it indicates an appropriate policy assignment and thereby fosters real and nominal convergence. The paper starts with an assessment of the state of convergence of Central and Eastern European countries in nominal and real terms. Based on a constitutional political economy framework and the additional requirements for future EMU members to give their central banks an independent status, it then assesses the degree of bank independence in Central and Eastern Europe. The paper ends with policy conclusions for a future enlarged EMU and notes that the accession candidates from Central and Eastern Europe have made significant progress in their ambitions to qualify for EMU accession. |
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| Contributor: |
Institute for Economic Research - http://www.ier.si |
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| Topic: |
Economy and Development |
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| Country: |
Slovenia |
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| Document Type: |
Economic Analyses and Commentaries |
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| Year: |
2003 |
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| Keywords: |
Banking, Banking Reform, Banking Sector, EU Accession, EU Enlargement |
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