This paper is the first to test the forward rate unbiasedness hypothesis for the Greek drachma
after the abolition of capital controls, and this was done using a full VECM analysis, including a new test.
The applicants would also have to join the second version of the exchange rate mechanism, which currently links the Euro to the Greek Drachma
and the Danish Krone.
Against the Greek drachma
, the pound is nearly 13 per cent stronger, while the pound is more than 9 per cent stronger against the Portuguese escudo.
If the figures include the Greek Drachma
and the Danish Krone, that are not part of the Euro zone from the outset, but which are the first members of the new ERM II, the fluctuation band is wider.
Calculating the value of the ecu includes taking into account the currencies of member states which will not take part in the euro experiment - the pound sterling, Danish crown and Greek drachma
The pivotal rates for the Greek Drachma
and the Danish Krone, both members of the European Monetary System (EMS-II) were also set on December 31.
If the Greek Drachma
and the Danish Krone, the two currencies that will not be part of the Euro zone at the start but which will be the first members of EMS Mark II, are included, the fluctuation band becomes wider.
9 per cent increase against the Greek Drachma
since April 1996 - 18.