EU Enlargement and Monetary Regimes from the Insurance Model Perspectives

Abstract

Some ten years ago, Michael Dooley (Dooley, 1997; Dooley, 2000) put forward an insurance model of currency crises, which after some modifications gives a good theoretical basis for explanation of the overall dynamics of the post communist transformation and diversity across countries and periods. The article analyses, within the framework of the insurance model, the role of monetary regimes (currency anchor) and EU enlargement (political and geostrategic anchor) and their relationships. The insurance game model not only contains an explanatory power, but it also has the potential to suggest a range of measures that could be useful in overcoming the "bad" dynamics, which we are witnessing today not only in the new member-states, but also EU-wide.