The expansion of the EMU: currency speculation and arbitrage

The latest European Union summit in the fall of 2002 revealed that over 11 countries (Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Malta, Poland, Slovakia, Slovenia, Bulgaria, and Romania) have expressed their desire to join the European Monetary Union (EMU) and convert their currency to the “euro”. The European Commission will have to completely equalize interest rates and inflation rates of all these countries before admitting them to join the EMU or there will be arbitrage profits and currency speculation, which will slow down the growth of the overall European Community and negatively affect the value of the euro.