Adopting the Euro in the new member states?

Introduction: The adoption of the euro in the candidate countries is an issue that has both an economic and a legal side to it. The economic side of the question deals with considerations related to the choice of an appropriate exchange rate regime for a particular country or group of countries. As for the legal aspects, these stem from the Treaty on the European Union, and the associated legal documents, which underlie the whole process of accession, including in the area of exchange rate policy. While the choice of exchange rate regime for the accession countries is based on theoretical economic considerations, these will have to match with the Treaty requirements. The economic discussion, which is presented in section 2, does not only treat the accession countries, but more generally the exchange rate strategies of non-EU countries, belonging to the group of developing and emerging market economies, which includes the so-called economies in transition. Section 3 deals more specifically with the candidate countries, analysing the institutional and legal principles underlying the choice of an exchange rate regime for these countries, as well as the transition specific economic considerations affecting this choice. Section 4 offers some conclusions.