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Title: How to Fix Conversion Rates at the Start of EMU

Author(s): Paul De Grauwe

Publication Date: November 1996

Keyword(s): Exchange Rate, Maastricht Treaty and Monetary Integration

Programme Area(s): International Macroeconomics

Abstract: This paper analyses several procedures for fixing conversion rates at the start of EMU. One consists of announcing a fixed conversion rate; a second (proposed by Lalmfalussy) would announce that the conversion rate will be an average of past market exchange rates; and a third involves announcing that the market exchange rate observed just prior to entry will be the conversion rate. The paper evaluates these different procedures and concludes that the Lamfalussy rule is unattractive compared to the two other alternatives.

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Bibliographic Reference

De Grauwe, P. 1996. 'How to Fix Conversion Rates at the Start of EMU'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1530