It is often argued that early European Monetary Union (EMU) participation by the new member states (NMS) should be discouraged on the grounds that they would lose the use of the exchange rate and interest rates as absorbers of asymmetric shocks, that the economies of the NMS are too weak to be subjected to the supposed rigors of the single currency and the Stability and Growth Pact (SGP), and that nominal convergence within the EMU would delay real convergence.
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