This paper highlights that the EMU transition process itself can pose challenges to individual accession countries and draws policy implications for ERM II. Differences in financial market development and international liabilities underscore the risks and benefits of ERM II, and may lead to...

Leaving foreign exchange markets to themselves may not lead to realistic and stable exchange rates. Thus appropriate criteria for interference must be defined. The OPTICA (Optimal Currency Area) Group which was appointed by the European Commission tried to work out appropriate rules for the EC....