Cristian Paun

The Euro and European Monetary Policy: A Critical View

The fiat money production and European Union’s monetary integration is considered to be a big leap in the integration process. The introduction of Euro and the centralization of fiat-money production by European Central Bank was considered to generate many benefits for Single Market, European citizens or business sector. Monetary integration and accession to Euro was linked to specific nominal convergence criteria and became compulsory for any new member. The history of Euro creation and adoption by majority of EU countries was not an easy one. The evolution of the Euro Zone after the introduction of a single currency was not merely positive. The introduction of the Euro was followed later by a significant enlargement, including Eastern European Countries (EEC), thus creating a European Union with “different speeds”. The current bailouts of various banks exposed to the Greek or the Cyprus crisis and the constant quantitative easing that significantly expanded the existing broad money (denominated in Euro) emphasize the fiat money features of this currency and the tragedy of commons surrounding this important project for European Union.

Financial contracts and financial crisis: the case of demand and term deposits

Financial crisis became one of the most debated subjects during the last few years. Succeeding more or less to identify its real causes, a lot of specialists proposed different solutions to this turmoil. This paper is focused on the discussion of the most important financial contracts used in banking sector: demand deposits and term deposits. Moreover, this paper will reveal why these contracts could be considered to be the source of financial crisis and why such instruments should be quickly adapted to the conditions of sound banking. As a case study, we proposed a comparative analysis of the provisions of these banking contracts used by three different Romanian banks. This reform of such banking contracts could induce more stability in the financial system and it is a sound solution to the current crisis.

Contagion effect of economic crisis in Eastern European countries

Different forces (governments, creditors, investors and financial institutions) and potential benefits determined a continuous expansion of globalisation process. After Bretton Woods system’s failure (1971), international financial system entered into a new development phase that was characterised by strong capital mobility, a larger participation of emerging markets to the global economy’s transactions. A higher integration level for these markets doubled by liberalisation of capital accounts generated a significant increase of interdependences between developed and developing economies from all regions of the world. The analysis of these interdependences is very important to understand the real nature of current economic and financial crisis and offers new perspectives on the effects of them at global level. This study is focused on the analysis of contagion effect of current economic crisis in Eastern European countries, identifying different factors that could explain the situation in this area.

The Romanian strategy on the road to adopt the euro: lessons from Hungary and Slovenia

The monetary union undoubtedly brings about economic benefits to its members and fosters harmonious and powerful exchange partnerships, but there is, of course, a tradeoff for all these. Thus, the adoption of the euro poses some challenges that do not outweigh the benefits stemming from it, but certainly make the timing of taking this step towards the absolute economic and monetary union an essential issue. This paper presents the benefits and challenges that come along with the adoption of the euro, underlining that each country has to take advantage of its derogation clause and make sure that giving up their national currency for the stable and powerful euro does not lure them into a painful economic trap. The Maastricht requirements are analysed by emphasising the aspects related to the Romanian economy. The comparative analysis between the Hungarian and Slovenian cases may serve as guidelines in the economic preparation of Romania for European Monetary Union (EMU) accession.