After accession to the European Union, new member countries have to decide the optimal path to the adoption of the euro. Some have argued that the euro should be adopted only when a sufficient degree of real convergence has been achieved. The idea is that real exchange rates will be affected by...

This paper discusses the implications of the collapse of Argentina's currency board arrangement on the debate about appropriate exchange rate regimes for emergingmarket countries (EMCs). It highlights the link between the inherent vulnerability of the EMCs (the so-called original sin hypothesis)...