This paper discusses the reasoning behind the exchange rate policies set out in the Maastricht Treaty of the European Union. The question of the appropriate exchange rate policies for new member states of the EU should be seen from the wider perspective of Economic and Monetary Union, and the creation of a single market.

Four basic arguments are made in defence of the current exchange rate framework: 

• it is argued that exchange rate stability, per se, may be desirable if that is seen from the broader perspective of European integration,

• exchange rate stability is vital for countries attempting to lock permanently their exchange rate vis-à-vis the euro at a given parity, 

• exchange rate stability prevents unilateral changes in the exchange rate that may delay partner countries’ convergence relative to the Maastricht criteria, and finally

• a period of “internship” inside the Exchange Rate Mechanism ensures that countries begin adjusting their behaviour/policies to the requirements of a common currency area.