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Title: |
The ECU and the Transition to European
Monetary Union |
| Author: |
Allen, Polly
Reynolds |
| Author
Affiliation: |
U CT |
| Source: |
International Economic Journal, Spring 1992, v. 6, no. 1, pp. 83-99 |
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Publication Date: |
Spring 1992 |
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Abstract: |
The private ECU markets have developed as
Eurocurrency markets because of the ECU's portfolio attractions--a
combination of return and exchange risk unobtainable at such low cost
from the national currencies. The private ECU functions in the
Eurocurrency and foreign exchange markets as a true currency, but
supports very few transactions in goods and services and depends upon
the private banks to maintain its basket exchange rate. The
possibilities of the ECU being used more for transactions, with
liquidity implications for the EC, and of the banks failing to maintain
the basket rate, suggest the need for an EC institution to issue base
money ECUs during the transition to monetary union. |
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