A major element in this surveillance is exchange rate poliy. Sooner or later the new Member States will take part in the European exchange rate mechanism, ERM II. The Treaty provides for a minimum participation period of two years before changeover to the euro can be considered.
Possibly the IMF has dulled private investors’ risk awareness and encouraged ‘moral hazard’ behaviour by granting generous financial packages in past crises. As important as short-term financial assistance is for giving direct support to affected countries that are prepared to reform and for preventing contagion, private investors must not simply be bailed out.