Eastern Enlargement of the Eurozone

The Eastern Enlargement of the EU will not be complete untilnbsp;the new member states join the EMU.nbsp;Economic andnbsp;political economy arguments point to fast EMU accession of new member states. Failure to do sonbsp;will create a two speed Europe, a fundamental change in the economic and political architecture of the EU, adding to the strains already evident between core and peripheral countries.nbsp;Current high level of trade and business cycle integration of new member states with the Eurozone, decreases the probability of asymmetric shocks. Lower transaction costs,nbsp;elimination of exchange rate risk andnbsp;the danger of currency crises, further trade and investment creation, lower interest rates and large fiscal gains, should outweigh the loss of the exchange rate asnbsp;adjustment tool. The Eastern Enlargement of the Eurozonenbsp;providesnbsp;comprehensive economic analysis ofnbsp;theoretical, empirical and political issues that will determine whether EMU enlargement is a success, whichnbsp;has implications for all common currency systems.