Template talk:Exchange-rate regime for EU members

ERM membership data for eurozone states
For the purpose of getting a complete overview for our debate, I just worked-out this data table. It is not intended for the article, but only for the talkpage.

Among the 19 eurozone members, the following 3 were only barely meeting the 2yr ERM-membership criteria: Finland, Italy, Slovenia. Danish Expert (talk) 13:15, 17 August 2014 (UTC)

Timeline
This is not directly related to the original topic, but what do you think about including some kind of graphical representation of the table above to make it more clear for the reader how long/short different member states participated in ERM prior to the adoption of the euro? --Glentamara (talk) 14:02, 17 August 2014 (UTC)
 * Yeah, it looks good! It could be helpful on European Exchange Rate Mechanism, Eurozone and Euro as well.  I tweaked it a bit so that we don't need to include back to 1972 to have all the country labels visible.  Just a suggestion, but perhaps we should include time in the EU/EC as well (at least post 1979)?  TDL (talk)
 * Great layout. I support adding it for all 4 proposed articles. In regards of the proposed orange color for EU membership with floating currencies, I also support that proposal, for the purpose to have a table with info for all 28 EU members, and also reflecting for how long time "new EU members" (post 1999) battled to reach convergence after becoming EU members. Another extra color category I will suggest also to be included, is a green color for "EU member states with a Euro-Based Currency Board (EBCB)". Such countries have unilaterally pegged their currency to the euro (without any obligations for ERM to intervene), and this was for a few of the countries (so far only 4) a preceding step to ERM-membership (and by principle EBCB is the same as ERM, in regards of being an instrument to fix/thigh your currency to the euro). For a visual example, I have implemented the suggested addition in the graph. Can we have room both for the additional green+orange color, or will it then become too complex? Danish Expert (talk) 09:15, 18 August 2014 (UTC)
 * The new version looks good, but I have two comments. First, I'm a bit sceptical towards the EBCB thing. EBCB and ERM are not two disjoint sets. The current version is misleading because the EBCB policy does not end when a country joins the ERM II (as ECB states in their text above). Second, the Czech Republic, Croatia, Romania, and Hungary have pegged there currencies to the euro without a currency board, i.e., they do not have a floating currency. Basically, the only difference between these countries and, e.g., Bulgaria is that Bulgaria has chosen a fluctuation band of 0 percent, i.e., there is no fluctuations at all around the central exchange rate for Bulgaria. Since I don't think pegging to the euro outside the ERM framework is relevant, I propose that we skip it and just show for how long different countries have been members of the EU. --Glentamara (talk) 16:33, 18 August 2014 (UTC)
 * Bytheway, I would like to propose a different color setting (see proposal below). I think it is better to use different nuances of the same color (blue) to indicate which EU members have the euro as their currency and which have their currency pegged to the euro. In this way it becomes more clear that pegging the currency to the euro outside the ERM, via ERM and adopt the euro, respectively, are three different degrees of integration towards the euro area. What do you think? --Glentamara (talk) 18:16, 18 August 2014 (UTC)
 * You have a valid point in regards, that it is of more interest to display which EU members are floating/pegging outside the ERM, rather than how they peg. Thus I can fully accept the reformulation of the categories in your latest proposal (not to mention EBCBs). However, colorwise I propose we implement a bigger difference between "Pegged outside ERM" and "Pegged inside ERM". Seen from the exchange rate perspective then you are right the difference is small, but seen from the "euro adoption" perspective the difference is huge (because of being the main delaying criteria, often delayed for political reasons). I prefer not to skip the "pegging outside ERM" category (proposed in your 16:33-reply, but not in your 18:16 reply), because the difference between pegging/floating outside ERM is relevant to display, mainly from the ERM-article's perspective, but also from the "euro adoption" perspective – as a pegging prior of ERM-membership makes it easier politically to make the last step to join ERM (because the state's national bank already adhere to the opinion that fixing the exchange rate is a better monetary policy compared to letting it float). To sum up, I complete agree with your latest proposal (version 2), except from the colors. Therefor I now copied version 2 into being a version 1 just with different colors. I can accept alternative colors, but just argue that "pegging outside ERM" must not be a blue variant. Danish Expert (talk) 09:25, 19 August 2014 (UTC)
 * I will come back to the color issue in another post later. But I have another question regarding the pegging to the euro outside ERM. Do we have any sources confirming the dates when Latvia, Slovakia, Slovenia, Malta, Cyprus, the Czech Republic, Romania, Croatia, Hungary etc. pegged there currencies to the euro? For instance, Latvia may have pegged its currency to the euro long before it introduced the EBCB regime. Similarly, we don't know when for instance the Czech Republic, Romania, Croatia and Hungary pegged their currencies to the euro (if it was before or after they joined the union). If we are to include the pegging to the euro outside ERM we need more sources. --Glentamara (talk) 15:01, 20 August 2014 (UTC)
 * I do not expect it will be difficult to source. Most central banks have a history section at their website, explaining the history of their monetary policy. Please also note, that we are only mapping the monetary history for as long as they were EU members, so the detective work here is limited. I am ready to find and add those sources, if you give green light for this proposed approach. Danish Expert (talk) 17:52, 20 August 2014 (UTC)
 * Yes, it sounds good for me if you can find all this information. Actually, I started to search for it, but instead I just found sources claiming that the Czech Republic, Croatia, Romania and Hungary have their currencies floating against the euro, which contradicts the information of, e.g., the Commission's website. Maybe this inconsistency is a result of a misunderstanding of what floating (and pegging) really means. Some people seem to think that a currency is floating if it is allowed to fluctuate within a certain band, which is incorrect. Anway, I hope you can find the information. The color scheme we can discuss later, when we know all details. --Glentamara (talk) 20:00, 20 August 2014 (UTC)
 * OK, I just started to compile the needed reference list below. This will take me long time. If you have time to help, you are more than welcome to update it. :-) Danish Expert (talk) 16:36, 21 August 2014 (UTC)
 * Thank you for the information you've provided. However, I don't think you should dig anymore into these things, because what we can conclude so far is that there is a huge diversity in the policy regimes. I think it is better to just have the ERM-II color, and not an additional color for currencies pegged to the euro outside ERM-II. The information you've provided so far shows that there is no clear distinction between pegged currencies and free-floating currencies, i.e., there are many different regimes inbetween. --Glentamara (talk) 19:55, 24 August 2014 (UTC)
 * Yes, we certainly have many types of monetary regimes outside the ERM. I agree with you we should not map them all by their own category. However, I still suggest we keep coloring 2 types of monetary regimes outside ERM: "EU members outside ERM with a floating currency (free float or crawling peg)" and "EU members outside ERM with a currency pegged to ECU/euro". Reason for this, is that the last category mimics the monetary regime inside ERM (with the only difference that its unilateral for as long as you are outside ERM). The term "floating" has been clarified by the parenthesis to mean anything from "free float" to "crawling peg", while we leave the second category only to display "fixed pegging" (currencies with a stable central target rate protected both by upper and lower fluctuation bands). The list of EU member states who operated "fixed pegging" against ECU/euro in their period stretching from accession to joining ERM, were: Cyprus, Malta, Latvia (Jan.-Apr.2005), Estonia (1 May 2004 – 27 June 2004), Lithuania (1 May 2004 – 27 June 2004), Hungary (1 May 2004–25 Feb.2008), Bulgaria (since 1 Jan 2007). Reason why this is so interesting to give a separate color, is that there is a very small difference between being in this category and then taking the last step to join ERM2. Danish Expert (talk) 20:37, 24 August 2014 (UTC)
 * I have just updated the tables below, to reflect how they look based on the proposal mentioned in my reply above. I still support color version 1 compared to color version 2, for the same reasons mentioned above. Moreover, I suggest we now add the table to the proposed 4 articles, as the below reference list has been established (almost complete). The remaining references for the early monetary regime in the 6 top countries can always be added later. So I think its good to go, and ask for approval (through creation of a template). Danish Expert (talk) 08:51, 30 August 2014 (UTC)
 * The reference list below has now been completed, and the timeline charts updated accordingly. Below each chart, I also linked all sources for the chart (1 primary, and 6 country specific). I thank you for being the initial master mind behind this chart idea, which I think is great. I have now also created the template with Version 1 of the chart, and added it into the 4 proposed articles (European Exchange Rate Mechanism, Eurozone, Enlargement of the eurozone, and History of the euro) . In case we need to continue debating some additional layout improvements, I also decided to move our debate over to this current template talkpage. Best regards, Danish Expert (talk) 07:57, 23 September 2014 (UTC)



Reference list for pegging/floating prior of ERM-membership: -
 * United Kingdom: With the breakdown of the Bretton Woods system, the pound floated from August 1971 onwards. The Chancellor of the Exchequer decided the pound should "shadow" (peg against) the West German Deutsche Mark from March 1987 until March 1988, with a fluctuation band stretching from 2.90 to 3.00 GBP/Mark. Technically the last day the UK exchequer intervened on monetary markets showing active support for the peg-policy was on 4 March 1988, but the Treasury claimed the peg-policy was still in place on monday 7 March 1988. The peg was officially abandoned on 10 March 1988 when the exchange rate breached the 3.00 ceiling, while PM Thatcher (and her personal adviser) had insisted in public that a "free float" was better – leading to the Exchequers political resignation. The UK returned to the peg-policy when it under the rule of PM Major became an official ERM-member from 8 Oct 1990 to 15 Sep 1992, with a central rate against D-mark being 2.95 (and a +-6% fluctuation band). UK had to abandon the ERM again on Black Wednesday 16 Sep 1992, and has since then been a floating currency.
 * Spain: From 1986 to June 1989, the value of the peseta with respect to other ERM countries was actually maintained in a unilateral +-6% band similar to the one adopted upon ERM entry in June 1989. At first it was pegged against an exchange rate index (currency basket) of all EC states except Portugal+Greece, but in 1988 the peg changed to be solely against D-mark.
 * Finland: From 1979 to Autumn 1992, the markka was pegged to the currency basket ECU. It then became free floating without a target rate, straight until its entry into ERM on 14 Oct 1996.
 * Italy: During its ERM quarantine from Sep 1992 to Nov 1996, the monetary policy was a de-jure float and defacto managed float.
 * Portugal: A crawling-peg exchange rate system, whereby a montly rate of depreciation of the escudo was announced and supported by its central bank, was in place from Aug 1977 until Sep 1990. Portugal did not formally join EMS until 6 Apr 1992, but the escudo was pegged to a basket of 5 main European currencies participating in ERM during Oct 1990 to 5 Apr 1992. This early pegging was a defacto peg against the ECU, and referred to as the "shadowing regime".
 * Greece: Had a free floating regime during 1979–1989. In the middle of 1989 the Bank of Greece began to follow the so-called "hard drachma" policy, by which the currency was allowed to depreciate relative to the ECU by less than the full inflation differential. Starting in 1995 the target exchange rate for the year was announced publicly (allowed to depreciate 3% relative to ECU in 1995), and in 1996 the drachma was for the first time targeted and pegged to remain with a stable central rate relative to the ECU. This stable pegging continued unchanged throughout the period from 1 Jan 1996 until 14 March 1998.
 * Austria: Pegged its currency to the D-mark, at least throughout the period from Oct 1994 to 8 Jan 1995.
 * Sweden: Explicit inflation target for monetary policy and a flexible exchange rate regime existed: Nov 1992-Oct 2006 + May 06- Apr. 08 + Apr.2008-May 2014.
 * Slovenia: Ahead of its ERM2-membership (and at least in Jan 2002 – June 2004) it had no peg, but operated a so-called managed continuous depreciation mechanism (also known as a "crawling peg") against the euro.
 * Cyprus: Pegged its currency since 1960. Started to peg against ECU in 1992, and automatically switched the peg to euro 1 Jan 1999. Pegged against euro with an unchanged central rate from 1 Jan 1999 – 2 May 2005, and adopted the same central rate as ERM2-member.
 * Malta: Since its independence in 1964, Malta has maintained a pegged exchange rate regime. Initially it pegged against Pound Sterling, but since early 1970s and until becoming ERM2-member 2 May 2005, it pegged against a currency basket of €+£+$ (having a ratio of 70%+20%+10% since its latest revision in Aug 2002).
 * Slovakia: Fixed peg in 1993 to Oct 1998. Floating regime: Oct 1998 to 27 Nov 2005. ERM2-membership started: 28 Nov 2005.
 * Latvia: Strict exchange rate peg, since Feb 1994 to the IMF’s Special Drawing Right (SDR), which was changed to peg against euro for the period 1 Jan 2005 – 2 May 2005.
 * Hungary: Operated a crawling peg regime from 1995 to Oct 2001. Switched to a traditional unilateral euro peg (stable central rate with a +-15% fluctuation band), which it has applied during Oct 2001 to Oct 2004 + Oct 2004 – 25 Feb 2008. A free-floating exchange rate regime has been in place from 26 Feb 2008 to 15 May 2014.
 * Poland: Free-floating regime in place from Apr 2000 – May 2014.
 * Czech Republic: Fixed peg in 1992–97. Floating regime: 1997 to Oct 2004 + Oct 2004-May 2012. Introduced a guaranteed lowest exchange rate (appreciation limit by target) towards the euro in Nov 2013, with the currency allowed freely to depreciate above, but this is not equal to a true peg.
 * Romania: Has been operating a de jure managed floating exchange rate regime since 1991, with no preannounced path for the exchange rate. De facto, the exchange rate regime moved gradually from a strongly managed float – including through the use of administrative measures until 1997 – to a more flexible one. In 2005, Romania shifted to a direct inflation targeting framework combined with a floating exchange rate regime, which have been in place at least until 15 May 2014.
 * Croatia: Operated a tightly managed float (The Croatian central bank does not defend a target rate or band for the kuna's exchange rate against the euro, but aims to counter excess volatility, while its use of counter-acting instruments has not been limited by any opposite consideration to inflation targets), at least throughout 15 May 2012 to 15 May 2014.

Version 1: Exchange-rate regime for EU members

Primary source: EC convergence reports 1996–2014. Extra sources: Italian lira, Spanish peseta, Portuguese escudo, Finish markka, Greek drachma, UK pound

Version 2 (different colors): Exchange-rate regime for EU members

Primary source: EC convergence reports 1996–2014. Extra sources: Italian lira, Spanish peseta, Portuguese escudo, Finish markka, Greek drachma, UK pound