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Title: Setting Conversion Rates for the Third Stage of EMU

Author(s): Paul De Grauwe and Luigi Spaventa

Publication Date: April 1997

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

Programme Area(s): International Macroeconomics

Abstract: This paper analyses the constraints on the choice of the conversion rates resulting from the fact that the external value of the Ecu cannot be changed at the start of the third stage of EMU and that one Ecu must be converted into one Euro. These constraints force the authorities to accept the market rates of 31 December 1998 when setting the conversion rates. We propose that the participants should agree on a set of bilateral conversion rates in advance and that they should steer market rates towards these agreed upon bilateral conversion rates.

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Bibliographic Reference

De Grauwe, P and Spaventa, L. 1997. 'Setting Conversion Rates for the Third Stage of EMU'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1638