DP520 | German Reunification and Exchange Rate Policy in the EMS

Author(s)

Publication Date

01/02/1991

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

This stresses that the impact of German reunification on the DM is affected by current plans to move toward monetary union in the European Community. The fundamental value of the DM is different depending upon whether Germany will be part of a larger monetary union in the year 2000, or whether instead the EMS will have survived without major realignments or else with them. As a result, the impact of decisions by the other members to follow the DM during the process of German reunification will depend partly on market interpretations of the persistence of similar decisions in the future. The same policy actions by the others will have different effects depending upon the future outlook of the EMS