European Currency (Monetary)

European Monetary System (EMS)

It aims to move towards closer monetary cooperation between the different member countries of the European Economic Community (EEC). Its origins date back to the Barre (1969) and Werner (1970) plans and European monetary snake system (1972) and Roy Jenkins's speech in Florence on October 13, 1977, the then chairman of the Commission European. At meetings of the Council of Europe of Bremen, July 1978, Brussels, December 1978, and Paris, March 1979, the establishment of the European Monetary System (EMS) was decided, the entry into force occurred on 13 March 1979.

As a result of the growing economic interdependence between Member States of the European Economic Community (EEC)

 , Performing together more than 50 100 exchanges, and strong INFLATION-nists tensions that occurred in the early seventies, it became more and more evident the need for some coordination or consistency of policies monetary followed by the Member States in order to contain the major currency fluctuations were occurring then.

Through the SME it is to create between the States of the EEC a zone of monetary stability to remedy the negative effects of the system of floating currencies established in 1973 and agreements of Jamaica in January 1976, and that will address, Also, monetary instability resulting from the instability of the dollar, exacerbating the differences between the prices of the currencies of the member countries, once the dollar's convertibility into gold was suspended in 1971. To this effect it creates in the EEC a common measuring instrument or standard, the ECU (European Currency Unit of), defined in relation to a basket of Community currencies, revised every five years or, on request, in the event that the weight of a coin has been altered by more than a certain percentage.

The ECU is issued by the European Monetary Cooperation Fund (EMCF) balancing of the deposit by the Member States 20 100 of its currency reserves in gold and foreign exchange. Its functions are to serve as a unit of account for SME operations, means of payment between the monetary authorities of the EEC and reserve asset, when the final monetary system has been adopted. The ECU is a common instrument of measurement of the currencies of the EEC countries, with reference to which the prices of the different Community currencies are fixed.

The Member States of the EEC, integrated into the ERM, have the obligation not to let their currencies exceed a certain fluctuation band around ECU, estimated at 2.25 ± 100 from the central rate or base price, except for the pound sterling and the Spanish peseta, the margin is temporarily ± 6 100. When the fluctuation of a currency reaches a certain divergence from its base price, called the alarm bell, set at 75 per 100 last margin, the respective national State must correct the situation, either by adopting measures appropriate monetary policy or by modifying the central rate of its currency.

As the success of the European monetary system depends ultimately on the convergence of economic policies and economies of different countries, the SME has instituted financial mechanisms to help solve the problems of exchange rate of the member countries of the EEC .

System of agreements between the European members of the Common Market to create between them a zone of stable exchange rates. European Monetary System.

System that binds together the different Community currencies, with the aim of achieving stability of exchange rates within the European Community.

English: European Monetary System (EMS).