Exchange-rate Regimes and the Transition Process in the Western Balkans

Although the importance for successful transition of a monetary policy aiming at a sustainable price level has often been stressed in the academic literature, there is still ample room for further research into the choice of the exchange-rate system throughout the different phases of the transition process. This article deals with the question of how the choice of a specific exchange-rate system affects the economic success of a country in transition and, above all, its gradual integration into the European Union (EU) and European Monetary Union (EMU). It focuses on the transition process in five South-Eastern European countries (SEECs). The authors are grateful for valuable comments received from participants in the EUROFRAME 2006 Conference in Berlin, Germany, the ICMAIF 2007 Conference in Rethymno, Greece, and the EEFS 2007 Conference in Sofia, Bulgaria.