Once such a country joins the monetary union, there is then a danger that its parity does not correspond to the fundamentals and that the country consequently joins EMU at the “wrong” exchange rate. From a formal point of view a currency board is hardly compatible with the framework of ERM II.
Euro-based currency board arrangements cannot be regarded as an acceptable substitute for participation in ERM II, neither can be any form of “euroization”. However, currency boards can be seen as a unilateral formal ex ante commitment augmenting the commitment to exchange rate stability deriving from participation in ERM II.