The final destination of monetary policy and integration for the Central and Eastern European EU Accession Countries is the joining of the euro area. The European Union has affirmed that, according to the EC Treaty, this will be possible, at the earliest, two years after EU accession. Against this background, the most important issue for the accession countries to decide is whether to aim for an early introduction of the euro a few years after EU accession or to opt for a more gradual strategy of monetary integration. This paper reviews the main arguments for and against either of these approaches. Thus, the focus is on the question of how speedily to introduce the euro in the accession countries, within the standard path laid down in the EU accession negotiations.

The paper arrives at three main conclusions. First, the available evidence of the economic costs and benefits of a future participation in the euro area is not uniform for all Central and Eastern European EU accession countries. This implies that, on economic grounds, the appropriate speed towards euro area accession may well be different between individual accession countries. In general terms, the costs of full monetary integration tends to decrease over time, as structural convergence - driven by the completion of transition and the accession to the European Union - proceeds. Second, from today's perspective, there is considerable degree of uncertainty about the optimal date for joining the euro area. Results depend on what weights one assigns to individual effects, what probabilities one attaches to future events and with what interest rate one discounts future costs and gains, if they materialize at different points in time. Thus, based on economic reasoning, it is not possible, in most cases, to pinpoint a particular optimal target year for euro area accession for individual candidate countries, but most probably there will be a range of several years with similar cost-benefit balances. Third, joining a monetary union is also a political economy issue. As the economics are not sufficiently clear-cut, the decision about the date will, at the end of the day, hinge upon political considerations as well. This, in turn, may tip the balance in favor of a relatively speedy quest for euro area participation for a number of accession countries.