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The Baltic challenge and Euro-area entry. Bruegel Policy Contribution 2009/13, November 2009

Darvas, Zsolt. (2009) The Baltic challenge and Euro-area entry. Bruegel Policy Contribution 2009/13, November 2009. [Policy Paper]

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    Abstract

    Resident Fellow Zsolt Darvas takes a look at the issue of the Baltic states - Estonia, Latvia and Lithuania - and the challenges facing those three countries in the aftermath of the financial crisis. He argues that because it is in the broader European interest to prevent a collapse in the Baltics, the best option is immediate euro entry at a suitable exchange rate supported by appropriate resolution in order to manage the resulting debt overhang. However, there seems to be no legal basis for this under the current euro accession criteria. Furthermore, the economic foundations of the criteria are fundamentally flawed, as euro-area members continue to violate the criteria while the EU's expansion to 27 members has made the criteria tougher for new member states to meet themselves. Ultimately, the European Council has the ability to reform the criteria without a formal treaty change. The Council should do so, the author argues, and allow for more meaningful benchmarks for all future euro-area applicants.

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    Item Type: Policy Paper
    Subjects for non-EU documents: Countries > Latvia
    Countries > Estonia
    Countries > Lithuania
    EU policies and themes > External relations > EU-Baltics
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bruegel (Brussels) > Policy Contributions
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 16 Dec 2009
    Page Range: p. 24
    Last Modified: 15 Feb 2011 18:19
    URI: http://aei.pitt.edu/id/eprint/12220

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