The demise of the CMEA trading system in 1991 and the shift to convertible currency settlements and world market prices was expected to bring about a severe contraction of intra-group trade, coupled with large imbalances in trade between Eastern Europe and the former Soviet Union. The observed...

According to the Maastricht Treaty, EMS countries will be able to join EMU if their inflation rates are not more than 1.5% higher than the average of the three lowest inflation rates in the EMS. In this paper I analyse the likelihood of inflation rates converging to the levels set out in the...

The debate on EMU has been very influenced by the traditional theory of optimum currency areas (OCAs). The paper shows that this theory is not an ideal yardstick for an assessment of EMU. Its assumptions are not very realistic and its focus on asymmetric real shocks is much too narrow. In...

We present a simple model of sovereign debt crises in which a country chooses its optimal mix of short and long-term debt contracts subject to standard contracting frictions: the country cannot commit to repay its debts nor to a specific path of future debt issues, and contracts cannot be made...

This paper addresses two questions: (1) Is a twelve-country monetary union in Europe feasible? (2) Can monetary union be achieved in stages, i.e. with an initial group of countries going first, and later admitting the others? After examining several politico-economic arguments concerning...

Important questions concerning the structure and operation of a European Central Bank remain unanswered. Although there exists no precedent for the process of institution-building in which the European Community is currently engaged, the founding and early operations of the Federal Reserve...

This Paper begins with a discussion of the relation between economics and politics in the construction of EMU. It briefly considers how the structural characteristics of the European economies relate to the Single Market programme, and how this initiative of the late 1980s both built the...

The paper discusses the institutional arrangements of a multilateral payments union for the Commonwealth of Independent States. It starts with an analysis of the risks of a non-cooperative solution, which would lead to serious liquidity and solvency problems and thus curtail inter-republican...

The paper discusses alternative options for a future monetary order in the area of the Soviet Union. Its main focus is on two questions: Under what conditions would a common rouble currency area be compatible with fiscal discipline and effective financial control over the large numbers of...

This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they...