PL EN


2007 | 2 | 147-159
Article title

The Risk of Loosing Control over Real Interest Rates under the Currency Zone

Authors
Title variants
Languages of publication
PL
Abstracts
EN
The article analyses how the functioning of the currency board system affects the prospects of joining the euro zone by the Baltic countries. Not long ago, it was expected that for the Baltic states the currency board system would be a convenient shortcut to the euro zone. Two years ago, such a scenario was perceived as almost certain. At present accession of the Baltic states to the euro zone seems very remote and uncertain. The main reason for this dramatic change was the materialisation of risks, which are inherent to the currency board system. Above all, the system is pro-cyclical. The illustration is the worrisome feedback, between the credit boom and the decrease in real interest rates. The latter were pushed by the inflation into the negative level. The recent problem of the Baltic countries is not when to join the euro zone but how to avoid a financial crisis, which might be triggered by the credit boom and rapidly growing foreign indebtedness.
Year
Issue
2
Pages
147-159
Physical description
Document type
ARTICLE
Contributors
author
  • A. Slawinski, Szkola Gl√≥wna Handlowa w Warszawie, al. Niepodleglosci 162, 02-554 Warszawa, Poland
References
Document Type
Publication order reference
Identifiers
CEJSH db identifier
07PLAAAA02755625
YADDA identifier
bwmeta1.element.0f0a8aa2-0672-3f39-b3ba-bc972233f9f1
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