The EMS, the Single Market and Monetary Union: An Overview

Piero Ferri

Chapter 1 in Prospects for the European Monetary System, 1990, pp 3-21 from Palgrave Macmillan

Abstract: Abstract On 13 March 1979 the European Monetary System (EMS) came into operation. In the inflationary context that then ruled, the experience with exchange rate flexibility that had been inauguarated when Bretton Woods was set aside in 1971 was not the success that some economists had predicted.1 Furthermore, in the political environment of the time any move that called for broad reforms of the world’s monetary system was neither fashionable nor feasible. In this environment, the EMS was born as a practical answer to two problems that the European Economic Community (EEC) had to face: to constrain exchange rate uncertainty and to reduce the divergence of inflation rates that could undermine trade among EEC countries. The two problems were related, for variable and divergent inflation rates give rise to exchange rate uncertainty.

Keywords: Exchange Rate; Monetary Policy; Real Exchange Rate; European Central Bank; Monetary Union (search for similar items in EconPapers)
Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-11629-4_1

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DOI: 10.1007/978-1-349-11629-4_1

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