ERMIIExchange Rate Mechanism II
ERMIIEnterprise Risk Management Institute International (also seen as ERM-II; Georgia)
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None of the other controls that were added to the baseline specification one at a time--namely, dummy for verbal intervention, distance of the exchange rate from the ERMII band limits, and the amount of time elapsed since the last intervention was statistically significant.
As noted above, a very strict interpretation of the Maastricht criterion on sustainability of price stability likely led to expectations of future appreciation being almost a safe bet during the ERMII period, whereas during 1999-2004 there was no trend movement in the exchange rate and the NBS was seeking to moderate the fluctuations.
(10) At the time of ERMII entry in November 2005, the central parity was set at the then-prevailing market rate of Sk 38.4550 per euro.
Nevertheless, we discuss joining the ERMII and the Banking Union in a broader context, in a context of real economic convergence, in a context of efficiency of institutions, and, in this case, also progress as regards judicial reform and fight against corruption and organised crime is also important element in this assessment but, once again, it's not a formal precondition", Mr Dombrovskis explained after the Eurogroup on 13 July in Brussels.
The country must also meet several conditions before applying for entry in the so called eurozone waiting room - the ERMII.
Monetary policy and EMU enlargement: Issues regarding ERMII and adoption of the Euro in Estonia.
Poland and the Euro zone enlargement: Monetary policy, ERMII, and other issues.
We also included several control variables, such as inflation INFL, the real effective exchange rate REER, the interest rate differential between the local and Euro Area lending rate IRD_EUR, the real domestic interest rate RDI, GDP per capita GDP_PC, a dummy variable, which takes the value of I if a country belongs to the exchange rate mechanism II ERMII (IMF, 2011), an EU dummy EU and the EBRD index of banking sector reform EBRD.
Simulations with a global econometric macromodel, NiGEM, offer insight into which countries may benefit most from postponing membership of ERMII. The appropriate choice of regime depends upon: expected developments of the real exchnage rate; the anticipated rate of prductivity convergence; the relative openness of the economies; the degree of fiscal consolidation required; the need to import monetary stability; economic stability; and the financial maturity of the economy.
The differential between one-year euro and forint implied forward rates starting in 2005 has been around 300 basis points in the period since May 2001, (10) of which 30-40 basis point corresponds to country risk premium within ERMII. (11)
The conversion rates for national currencies were irrevocably fixed, the new exchange mechanism (ERMII) became effective for two of the four European countries that did not joint the initial EMU, and the Eurosystem (the ECB and the national central banks of the countries) began conducting a single monetary policy for the euro area.