oussama94
05-28-2017, 19:42
In 1979, a Franco-German initiative set up the European Monetary System
(EMS) in order to stabilize exchange rates, reduce inflation, and prepare
for monetary integration. The Exchange Rate Mechanism (ERM), one of
the EMS’s main components, gave each participatory currency a central
exchange rate against a basket of currencies, the European Currency Unit
(ECU). Participants (initially France, Germany, Italy, the Netherlands, Belgium,
Denmark, Ireland, and Luxembourg) were then required to maintain
their exchange rates within a 2.25 percent fluctuation band above or below
each bilateral central rate. The ERM was an adjustable-peg system, and
nine realignments would occur between 1979 and 1987. While the United
Kingdom was not one of the original members, it would eventually join in
1990 at a rate of 2.95 deutsche marks to the pound and with a fluctuation
band of +/– 6 percent
(EMS) in order to stabilize exchange rates, reduce inflation, and prepare
for monetary integration. The Exchange Rate Mechanism (ERM), one of
the EMS’s main components, gave each participatory currency a central
exchange rate against a basket of currencies, the European Currency Unit
(ECU). Participants (initially France, Germany, Italy, the Netherlands, Belgium,
Denmark, Ireland, and Luxembourg) were then required to maintain
their exchange rates within a 2.25 percent fluctuation band above or below
each bilateral central rate. The ERM was an adjustable-peg system, and
nine realignments would occur between 1979 and 1987. While the United
Kingdom was not one of the original members, it would eventually join in
1990 at a rate of 2.95 deutsche marks to the pound and with a fluctuation
band of +/– 6 percent