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Unformatted text preview: Nikolay Nenovsky (UNWE, BNB) * Kalin Hristov (UNWE, BNB) OFFICIAL EUROISATION OF BULGARIA: PROS AND CONS May 2001 Summary: The article presents in a systematised form the costs and benefits of the potential euroisation of Bulgaria in the process of EU and EMU accession. Given that Bulgaria is under a currency board arrangement, the focus is placed on the comparison between euroisation and the currency board arrangement currently in place. Arguments are provided in support of the statement that the euro needs a quick introduction on the Balkans and in Bulgaria, so that it could occupy a strategic position in the future geography of money. JEL classification : E58, F33, F36 Key words : monetary regime, euroisation, currency board, Bulgaria, accession process I. Introduction * [email protected] or [email protected] and [email protected] . The views expressed in this article are those of the authors and do not necessarily reflect BNB policy. Kalina Dimitrova provided a technical assistance in the research process. We appreciate the comments of Ivan Stoykov and Malinka Koparanova. 1 Nenovsky, N., K. Hristov, Euroisation of Bulgaria May 2001 The financial and currency crises during the second half of the 90s once again brought to the fore the issue of the choice of optimal foreign exchange and monetary regime. The official dollarisation (euroisation) was among the most often advanced solutions, which received great recognition (popularity), both in Latin America and Asia, and in the countries negotiating for European Union (EU) and European Monetary Union (EMU) 1 membership. A number of countries already abandoned their national currencies and adopted the dollar (Ecuador, Salvador, Guatemala and East Timur) or the euro as an official legal tender (Montenegro) 2 . In Europe, the debates on euroisation as monetary regime were and are still perceived as part of the process of accession of the Central and East European economies in EU and EMU. In a great number of 1 Further on in the text the term “official euroisation” will be used to denote the adoption of the euro as an official legal tender, while “official dollarisation” will denote the introduction of the dollar as an official legal tender. Latin America and Asia witnessed much more heated discussions compared to Europe. 2 For general presentation of the principles of dollarisation and an exhaustive overview of the countries with official dollarisation , S s ee Bogetic, Z. (1999). Official or "Full" Dollarization: Current Experiences and Issues, http://users.erols.com/kurrency/ bogdllr.htm; Bogetic, Z. (2000a). Full Dollarization: Fad or Future?, Challenge 43(2), p.17-48 ; Bogetic, Z. (2000b). Official Dollarization: Current Experiences and Issues, Cato Journal, Vol. 20, N2, p.179-213....
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This note was uploaded on 05/04/2011 for the course FINANCE 104 taught by Professor Smith during the Spring '10 term at Abilene Christian University.
- Spring '10