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Monetary Unions and Hard Pegs
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Monetary Unions and Hard Pegs: Effects on Trade, Financial Development, and Stability

Volbert Alexander, George M. von Furstenberg, and Jacques Mélitz

Abstract

Financial services with global reach are a highly information-intensive business. In it, the ability to deliver reliable price formation, global liquidity, and network benefits is increasingly critical for the choice of currency denomination. Conversely, the exchange value and prospective usefulness of small currencies becomes less certain, and transaction costs for them may rise. Economic instability is invited as currency and portfolio substitution with the dominant international currency denomination increase the likelihood of currency mismatches and financial crises. In view of these faili ... More

Keywords: accession countries, Argentine crisis, banking crises, banking supervision and regulation, currency crises, dollarization, electronic money, emerging market economies, euro, European, exchange rate system, International financial arrangements, international monetary system, international money and trade, monetary economics, monetary union, Monetary Union, network externalities, portfolio substitution

Bibliographic Information

Print publication date: 2004 Print ISBN-13: 9780199271405
Published to Oxford Scholarship Online: August 2004 DOI:10.1093/0199271402.001.0001

Authors

Affiliations are at time of print publication.

Volbert Alexander, editor
University of Giessen, Germany
Author Webpage

George M. von Furstenberg, editor
Indiana University, USA
Author Webpage

Jacques Mélitz, editor
University of Strathclyde, Scotland, CREST, Paris, and CEPR
Author Webpage

Contents

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1 Editorial Introduction to the Volume and Detailed Introductions to Each of its Four Parts

Volbert Alexander, Jacques Mélitz, and George M. von Furstenberg

PART I Current and Past Concepts of Monetary Union

PART II Trade and Price Effects of Monetary Union

PART III Monetary Integration in Latin America

9 Trade Agreements, Exchange Rate Disagreements

EDUARDO FERNANDEZ-ARIAS, UGO PANIZZA, AND ERNESTO STEIN

10 Sudden Stops, the Real Exchange Rate, and Fiscal Sustainability: Argentina's Lessons

GUILLERMO A. CALVO, ALEJANDRO IZQUIERDO, AND ERNESTO TALVI

11 Living and Dying with Hard Pegs: The Rise and Fall of Argentina's Currency Board

AUGUSTO DE LA TORRE, EDUARDO LEVY YEYATI, AND SERGIO L. SCHMUKLER

PART IV Common Monies, Political Interests, and Infrastructure

15 Electronic Money and the Optimal Size of Monetary Unions

CLAUDIA COSTA STORTI AND PAUL DE GRAUWE