The likelihood of European Monetary Union

Abstract

A simple calculation method measures the level of probability of the European Monetary Union (EMU) formation. The equation makes use of forward interest rates with settlement time after January 1, 1999, to determine the number of countries that will abide by EMU's provision for a single euro-currency of all members. The study reveals the probability of EMU formation that is dependent on political events and opinion polls. Germany, Netherlands, Belgium and France are expected to be the prime movers in the monetary union. JEL Codes: F15

Keywords

• Foreign Exchange & Reserves Policy
• Monetary unions
• European Monetary System