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"A crucial element for the stability of the EMS is the perception on the part of the financial markets that the authorities are strongly committed to defending their exchange rates" Discuss.
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"A crucial element for the stability of the EMS is the perception on the part of the financial markets that the authorities are strongly committed to defending their exchange rates". Discuss this statement with reference to the roles that speculators and German reunification had in the EMS crisis of 1992/93. How did the crisis influence the future path of monetary integration? A fixed exchange rate regime operated in Europe in the post war period until the early 1970s. The European Monetary System replaced Bretton Woods; it begun in 1979 and ended on 31 December 1998, with the launch of the Euro. The EMS was an example of an 'incomplete' monetary union, and it had two principal components - the Ecu, and the Exchange Rate Mechanism (ERM). The ERM was a predecessor to the Euro, but the first direction towards a common currency in Europe was the 1957 Treaty of Rome. Although its...
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