Back Matter

Author(s):
Peter Nyberg, Horst Ungerer, and Owen Evens
Published Date:
May 1983
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    Appendix I Statistical Tables
    Table 1.EMS: Periods of Strain1,2
    Signaled by
    No.PeriodSource of StrainDivergence indicatorParity gridRemedies Adopted
    1May-June 1979D: Widening CA deficits and deficient capital inflow. B: Continued lack of confidence.DKr: –75DM/BFIntervention to support both BF and DKr.

    B: Discount rate up from 6 to 9 percent.

    D: Discount rate up from 8 to 9 percent.
    2Aug.-Sept. 1979D and B: Capital inflows induced by earlier increases in nominal interest rates dry out in both countries.DKr: –75

    BF: –75
    DM/DKrIntervention to support both BF and DKr.

    D: Discount rate up from 9 to 11 percent on Sept. 17 after which date intervention stops.

    B: Discount rate up from 9 to 10 percent. Realignment I: DM up, DKr down relative to other EMS currencies.
    3Nov. 1979Uncertainty after parliamentary election in late October puts pressure on the DKr.DKr: slightly negative few days before realignmentIntervention in support of DKr. Realignment II: DKr devalued against all other EMS currencies.
    4Dec. 1979-March 1980D: Deficient capital inflow because of uncertainty about DKr in view of two recent realignments and because of increasing international nominal interest rates. B: Deficient capital inflow to finance CA deficits.FF/BF (in March)Intervention keeps DKr in the middle of the band. Discount rate up from 11 to 13 percent. B: Intervention majority in EMS currencies to support BF. Discount rate up from 10 to 14 percent.
    5Oct. 1980G: Weak CA position relative to U.S. and major EMS countries plus interest differential disfavoring DM denominated investments.DM: –70FF/DMIntervention in support of D. M. F: Loosening of credit market. G: Slight tightening of credit market.
    6Feb. 1981G: As U.S. interest rates surge and uncertainty about G’s strategic (Poland) and economic position increases, pressure on DM becomes heavy.DM: –60’s FF: touching +75 occasionally in. Jan. and Feb.FF/BF and FF/DMIntervention in $ and FF to support DM. G: and Special Lombard rate introduced; substantial tightening of monetary policy.
    7March 1981BF and Lit exposed at bottom of band subsequent to DM firming. After devaluation of Lit, BF remains under heavy pressure.BF: –75 Lit: –75 (briefly)DM/BF and FF/BFIntervention followed by increase in and discount rate from 16.5 to 19 percent. Realignment III: Devaluation of Lit. B: Intervention followed by increase in the discount rate from 12 to 16 percent.
    8May 1981Presidential election in France (5/10/81).FF: –75 (two weeks from 5/11/81)DM/FFF: Intervention. Interest rate and exchange control measures.
    9Aug.-Sept.1981On the background of pessimism as to the devaluation of the FF, DM gains strength on improving external performance, and FF and BF have problems following DM up against $.DM: +75 (last two weeks of Sept.). BF: not past –75 “diverging” of weak currenciesDM/BFIntervention in support of weak EMS currencies. Realignment IV: DM and f. revalued and FF and Lit devalued against DKr, BF, £Ir.
    10Nov. 1981Brief pressure on BF when negotiations to form a government break downBF: once below –75 on Dec.10Intervention in support of BF. B: Discount 10rate from 13 to 15 percent.
    11Feb. 1982Diminishing confidence in the future performance of the Belgian economy.BF: close to, but not past –75.DKr: slightly negativeIntervention in support of BF. B: Discount rate from 13 to 15 percent.

    B: Intervention. Realignment V: Devaluation of BF and DKr against other EMS currencies.
    12March 1982F: Widening inflation differential with G. DKr and BF lose strength acquired in previous realignments.FF: one flash (–76) on March 23; otherwise well within boundsDM/FF and f./FFF: Intervention, tightening of monetary policy, exchange controls, budget tightening.
    13May-June 1982“The weekend syndrome”: pressure on BF, FF, Lit, especially late in week. Persistent realignment rumors.DM: above +75 from end-April. BF: most “diverging”DM/FFIntervention. Realignment VI: Revaluation of DM and f. and devaluation of Lit and FF against DKr, BF, and £Ir.
    14Dec. 1982- March 1983Deteriorating trade balance and inflation in France. Increasing pressure on FF, especially late in week; persistent realignment rumors; anticipation of realignment after March elections in Federal Republic of Germany, France.BF: frequently below in January, February; FF: below in MarchDM/FF f./BFSubstantial intervention in support of BF and FF, interest rate measures in Belgium, Federal Republic of Germany, Netherlands. Emergency foreign exchange measures in Belgium. Realignment VII: Revaluation DM, f., DKr, BF, and devaluation of FF, Lit, £Ir.
    Source: Fund staff estimates and calculations.

    Defined as periods with reports of substantial interference in the exchange market by intervention, capital and exchange controls, or measures of monetary policy motivated by exchange rate developments.

    Notation: B—Belgium; BF—Belgian franc; D—Denmark; DKr—Danish krone; F—France; FF—French franc; G—Federal Republic of Germany; DM—deutsche mark; £Ir—Irish pound; I—Italy; Lit—Italian lira; N—Netherlands; f.—Netherlands guilder; U.S.—United States; $—U.S. dollar; CA—current account.

    Table 2.EMS: Bilateral Central Rates1
    Currency

    units
    100 Belgian/

    Luxembourg francs
    100 Danish

    kroner
    100 Deutsche

    mark
    100 French

    franes
    100 Italian

    lire
    100 Irish

    pounds
    100 Netherlands

    quilders
    Belgian/Luxembourg francs
    Mar. 13, 1979556.8521,571.64680.5123.436685,954.711,450.26
    Sept. 24, 1979540.9421,603.07680.5123.436685,954.711,450.26
    Nov. 30, 1979515.1861,603.07680.5123.436685,954.711,450.26
    March 23, 1981515.1861,603.07680.5123.230485,954.711,450.26
    Oct. 5, 1981515.1861,691.25660.0973.133555,954.711,530.03
    Feb. 22, 1982546.1541,848.37721.4153.424666,507.921,672.16
    June 14, 1982546.1541,926.93679.9413.330476,507.921,743.23
    March 21, 1983551.5362,002.85653.1443.199226,187.321,777.58
    Danish kroner
    Mar. 13, 197917.9581282.237122.2070.6171611,069.35260.439
    Sept. 24, 197918.4862296.348125.8010.6353121,100.81268.098
    Nov. 30, 197919.4105311.165132.0910.6670781,155.84281.503
    Mar. 23, 198119.4105311.165132.0910.6270521,155.84281.503
    Oct. 5, 198119.4105328.279128.1280.608241,155.84296.986
    Feb. 22, 198218.3098338.433132.090.627051,191.59306.171
    June 14, 198218.3098352.817124.4960.6098041,191.59319.183
    Mar. 21, 198318.1312363.141118.4230.5800571,121.84322.297
    Deutsche mark
    Mar. 13, 19796.3627735.431343.29950.218668378.88692.2767
    Sept. 24, 19796.23833.744142.45050.21438371.45790.4673
    Nov. 30, 19796.23832.137342.45050.21438371.45790.4673
    Mar. 23, 19816.23832.137342.45050.201518371.45790.4673
    Oct. 5, 19815.912830.461939.03020.185281352.0990.4673
    Feb. 22, 19825.4101829.547939.03020.185281352.09090.4673
    June 14, 19825.1896128.343335.28630.172839337.73690.4673
    Mar. 21, 19834.9928827.537532.61070.159733308.92588.7526
    French francs
    Mar. 13, 197914.694881.8286230.950.505013875.034213.113
    Sept. 24, 197914.694879.4905235.5680.505013875.034213.113
    Nov. 30, 197914.694875.7054235.5680.505013875.034213.113
    Mar. 23, 198114.694875.7054235.5680.474714875.034213.113
    Oct. 5, 198115.149378.047256.2120.474714902.098231.789
    Feb. 22, 198213.861675.706256.2120.474714902.098231.789
    June 14, 198214.707280.3239283.3960.489818957.129256.38
    Mar. 21, 198315.310684.4432306.6480.489819947.313272.158
    Italian lire
    Mar. 13, 19792,909.7916,303.345,731.419,801.5173,270.042,199.5
    Sept. 24, 19792,909.7915,740.346,646.019,801.5173,270.042,199.5
    Nov. 30, 19792,909.7914,990.746,646.019,801.5173,270.042,199.5
    Mar. 23, 19813,095.5115,947.649,623.221,065.3184,329.044,893.0
    Oct. 5, 19813,191.2616,440.953,972.221,065.3190,031.048,827.2
    Feb. 22, 19822,920.015,947.7053,972.221,065.3190,031.048,827.2
    June 14, 19823,002.5816,398.757,857.420,415.7195,405.052,341.9
    Mar. 21, 19833,125.7617,239.762,604.320,415.7193,401.055,563.0
    Irish pounds
    Mar. 13, 19791.679349.3514626.393211.42810.057713624.3548
    Sept. 24, 19791.679349.0842426.92111.42810.057713624.3548
    Nov. 30, 19791.679348.6516926.92111.42810.057713624.3548
    Mar. 23, 19811.679348.6516926.92111.42810.054250824.3548
    Oct. 5, 19811.679348.6516928.401811.08530.05262325.6944
    Feb. 22, 19821.536598.3921628.401811.08530.05262325.6944
    June 14, 19821.536598.3921629.609010.44790.0511175826.7864
    Mar. 21, 19831.616218.9139632.370310.55620.051706128.7295
    Netherlands guilders
    Mar. 13, 19796.8953138.3967108.3746.92350.23697410.597
    Sept. 24, 19796.8953137.2998110.53746.92350.23697410.597
    Nov. 30, 19796.8953135.5237110.53746.92350.23697410.597
    Mar. 23, 19816.8953135.5237110.53746.92350.222752410.597
    Oct. 5, 19816.5358333.6716110.53743.14280.204804389.19
    Feb. 22, 19825.9802732.6615110.53743.14280.204804389.190
    June 14, 19825.7364631.3300110.53739.00450.191051373.324
    Mar. 21, 19835.6256131.0273112.67336.74340.179976348.075
    Sources: Commission of the European Communities; and Fund staff calculations.

    Expressed as the price of 100 units of the currency on top of the column in the currency in front of the row.

    Table 3.EMS Realignments: Percentage Changes in Bilateral Central Rates1
    Sept. 24, 1979Nov. 30, 1979Mar. 23, 1981Oct. 5, 1981Feb. 22, 1982June 14, 1982Mar. 21, 1983
    Belgian and Luxembourg francs−8.5+1.5
    Danish krone−2.9−4.8−3.0+2.5
    Deutsche mark+2.0+5.5+4.25+5.5
    French franc−3.0−5.75−2.5
    Italian lira−6.0−3.0−2.75−2.5
    Irish pound−3.5
    Netherlands guilder+5.5+4.25+3.5
    Sources: Commission of the European Communities; and Fund staff calculations.

    Calculated as the percentage change against the group of currencies whose bilateral parities remained unchanged in the realignment, except for the most recent realignment (3/21/83) in which all currencies were realigned—for this the percentages are shown as in the official communique.

    Table 4.EMS: ECU Central Rates1
    Mar. 13,

    1979
    Sept. 24,

    1979
    Nov. 30,

    1979
    Mar. 23,

    1981
    Oct. 5,

    1982
    Feb. 22,

    1982
    June 14,

    1982
    Mar. 21,

    1983
    Belgian/Luxembourg franc
    Units of national currency per ECU39.458239.845639.789740.798540.757244.696344.970444.3662
    Percentage change from previous central rate0.98−0.142.54−0.109.660.61−1.34
    Percentage change from initial central rate0.980.843.403.2913.2813.9712.44
    Danish krone
    Units of national currency per ECU7.085927.365947.723367.919177.91117.8.183828.23408.04412
    Percentage change from previous central rate3.954.852.54−0.103.450.61−2.31
    Percentage change from initial central rate3.959.0011.7611.6515.4916.2013.52
    Deutsche mark
    Units of national currency per ECU2.510642.485572.482082.545022.409892.418152.333792.21515
    Percentage change from previous central rate−1.00−0.12.54−5.310.34−3.48−5.08
    Percentage change from initial central rate−1.00−0.11.37−4.01−3.68−7.04−11.77
    French franc
    Units of national currency per ECU5.798315.855225.847005.995266.174436.195646.613876.79271
    Percentage change from previous central rate0.98−0.142.542.990.346.752.70
    Percentage change from initial central rate0.980.843.406.496.8514.0717.15
    Italian lira
    Units of national currency per ECU1,148.151,159.421,157.791,262.921,300.671,305.131,350.271,386.78
    Percentage change from previous central rate0.98−0.149.12.990.343.462.70
    Percentage change from initial central rate0.980.8410.0013.2813.6717.6020.78
    Irish pound
    Units of national currency per ECU0.6626380.6691410.6682010.6851450.6844520.6867990.6910110.71705
    Percentage change from previous central rate0.98−0.142.54−0.100.340.613.77
    Percentage change from initial central rate0.980.843.403.293.654.288.21
    Netherlands guilder
    Units of national currency per ECU2.720772.747482.743622.813182.663822.672962.579712.49587
    Percentage change from previous central rate0.98−0.142.54−5.310.34−3.49−3.25
    Percentage change from initial central rate0.980.843.40−2.09−1.76−5.18−8.27
    Source: Commission of the European Communities.

    The change of any central rate expressed in terms of ECUs implies a simultaneous change of all other ECU central rates, since the ECU is made up of a basket of currencies. Positive sign indicates depreciation relative to the ECU.

    Table 5.EMS: Interest Differentials for Three-Month Deposits, 1979–821
    Belgium2 Uncovered3Covered3,4France Uncovered3Covered3,4Fed. Rep. of Germany Uncovered3Covered3,4Italy Uncovered3Covered3,4Netherlands Uncovered3Covered3,4
    1979Mar.2.83−0.503.560.875.33−0.53−1.06−0.243.50−0.29
    Apr.2.51−0.483.881.215.23−0.72−0.680.313.44−0.02
    May1.790.622.073.034.54−0.28−0.621.981.690.06
    June0.880.791.382.064.08−0.28−0.811.992.25−0.05
    July−0.620.020.761.674.53−0.53−0.184.561.88−0.30
    Aug.−0.19−0.040.811.254.79−0.120.633.152.63−0.27
    Sept.−0.030.531.121.854.80−0.651.193.702.94−0.40
    Oct.1.28−0.182.881.505.88−0.952.263.895.00−0.76
    Nov.−0.35−0.171.621.394.35−1.080.502.66−0.50−1.12
    Dec.0.43−0.012.311.815.01−1.08−2.691.211.56−0.66
    1980Jan.−0.13−0.372.130.485.53−0.65−3.313.033.07−0.11
    Feb.1.630.083.250.557.90−0.14−1.001.494.121.49
    Mar.2.000.276.000.029.90−0.701.63−0.168.56−0.16
    Apr.−2.00−1.101.380.034.08−0.79−1.930.044.570.16
    May.−6.13−0.75−1.930.560.39−0.23−6.621.22−0.620.35
    June−5.19−0.61−2.440.15−0.14−0.47−7.639.23−0.690.09
    July−2.44−0.12−1.560.370.69−0.84−7.565.390.570.08
    Aug.−0.790.750.713.30−0.60−5.0610.111.630.07
    Sept.1.46−6.081.690.194.91−0.03−4.575.573.940.07
    Oct.2.49−0.223.38−0.356.18−0.45−2.372.956.130.01
    Nov.4.81−0.196.63−0.408.30−0.480.380.828.06−0.26
    Dec.4.34−0.716.32−0.207.62−1.540.321.068.57−0.45
    1981Jan.6.09−0.886.38−0.418.03−0.310.011.298.19−0.27
    Feb.3.560.352.810.052.05−0.27−0.880.885.38−0.04
    Mar.−2.122.941.830.851.31−0.94−3.381.404.63−0.04
    Apr.−0.121.303.260.283.82−0.70−2.94−0.626.000.43
    May2.461.63−0.442.364.28−1.07−2.441.975.37−0.45
    June3.250.61−0.124.844.72−0.91−2.873.486.01−0.37
    July2.195.461.514.385.66−1.02−2.137.685.38−0.71
    Aug.2.825.840.7010.155.36−0.76−2.9410.644.56
    Sept.1.697.36−0.888.605.46−0.53−3.3711.525.01−0.10
    Oct.0.714.690.252.023.95−0.52−5.410.892.97−0.11
    Nov.−2.501.75−3.910.411.16−0.48−9.32−0.490.940.12
    Dec.−1.943.86−1.281.692.93−0.38−7.501.502.94−0.03
    1982Jan.0.634.90−0.900.114.12−0.38−6.940.164.50−0.14
    Feb.0.630.650.871.724.67−0.63−5.820.095.44−0.14
    Mar.0.752.36−0.788.855.71−0.93−5.315.007.07−0.51
    April−0.062.15−1.865.955.62−0.83−5.753.296.44−0.49
    May−0.311.54−1.859.075.19−1.01−6.252.675.75−0.41
    June0.630.880.732.016.36−0.89−4.561.186.88−0.53
    July−1.62−0.41−1.951.183.57−0.91−6.87−0.084.07−0.13
    Aug.−3.34−0.29−2.757.443.07−0.39−7.311.813.630.08
    Sept.−1.370.26−2.573.883.29−0.61−7.130.223.56−0.23
    Oct.−2.600.14−3.126.012.61−0.42−8.821.253.44−0.05
    Source: Fund staff calculations.

    End of month.

    Rates pertain to last Tuesday of the month.

    Positive sign indicates differential in favor of Eurodollar investment relative to domestic investment, while negative sign indicates the reverse. Domestic interest rates for France, the Federal Republic of Germany, Italy, and the Netherlands are interbank rates. For Belgium the rate on four month certificates of the Government Securities Stabilization Fund is used.

    Covered interest differential is calculated as the uncovered interest differential minus the forward exchange quotation.

    Table 6.EMS: Economic Measures in Connection with Realignments1
    RealignmentMajor Measures in
    Realignment DateWording Based

    on Official

    Communique
    BelgiumDenmarkFranceItaly
    September 24, 1979Shift in cross-rate between DM and DKr of 5 percent. Shift in crossrate between DM and other EMS currencies of 2 percent
    November 30, 1979Devaluation of DKr by 5 percent against other EMS currencies (no communique)
    • Energy component removed from wage regulating index

    • Short-term price and wage freeze measures

    • Increases in direct personal wealth and corporate taxes

    March 23, 1981Devaluation of Lit by 6 percent against other EMS currencies
    • Discount rate up 2½ percent to 19 percent percent

    • Government spending cut plans

    October 5, 1981Revaluation of DM and f. by 5.5 percent against DKr, BF, Lux F, £Ir. Devaluation of FF, Lit by 3 percent against DKr, BF, £Ir
    • Temporary price and profit freeze

    • Incomes policy aiming at maintenance of average income purchasing power, narrowing of income range

    • FF 10.15 billion government expenditure in suspense

    February 22, 1982Devaluation of BF, Lux F, by 8.5 percent and of DKr by 3 percent against other EMS currencies
    • Temporary freeze of wages and longer-run measures to impede complete wage indexation

    • Temporary price freeze

    • Reduction in corporate tax burden

    • Measures to stimulate the stock market

    June 14, 1982Change in bilateral rates: between FF and, DM, f.: 10 percent; between Lit and DM, DKr, BF, Lux F, £Ir and DM, f.: 4.25 percent
    • Temporary freeze of prices, rents wages and dividends (except minimum wage) to be followed up by agreements on price and dividend behavior percent and indexation practices for wages

    • Revision of 1983 budget to restrict deficit to FF 120 billion (3 percent of gross national product)

    • Announcement of budgetary austerity measures, June 23.

    March 21, 1983
    Change in central rates:
    Deutsche mark+5.5
    Netherlands guilder+3.5
    Danish krone+2.5
    Belgian franc+1.5
    Luxembourg franc+ 1.5
    French franc−2.5
    Italian lira−2.5
    Irish pound−3.5
    • Package of restrictive measures in budgetary, monetary, and foreign exchange fields.

    Sources: Commission of the European Communities and Fund staff.

    Notation: BF—Belgian franc; DKr—Danish krone; FF—French franc; DM—deutsche mark; £Ir—Irish pound; Lit—Italian lira; Lux F—Luxembourg franc f.—Netherlands guilder.

    Table 7.Variability of Nominal Effective Exchange Rates, 1974–821,2
    AverageAverage
    197419751976197719781974–781979198019811979–811982
    Belgium21.723.227.69.415.419.59.314.514.512.835.9
    Denmark26.618.524.818.014.420.517.420.124.320.619.5
    France27.921.940.35.417.122.514.618.331.521.540.8
    Germany, Federal Republic of25.923.636.520.220.425.323.023.922.423.115.9
    Ireland10.939.663.315.819.729.912.422.923.419.610.8
    Italy31.55.463.414.720.127.08.628.939.525.715.7
    Netherlands23.119.533.58.116.820.211.013.126.016.714.7
    Average EMS323.921.741.313.117.723.613.820.225.920.021.9
    Austria33.621.431.817.214.223.632.922.523.926.410.0
    Canada6.915.116.29.439.517.414.37.217.372.919.8
    Japan31.210.021.653.785.540.470.970.321.454.235.1
    Norway20.025.626.621.523.123.48.87.410.38.844.1
    Sweden23.122.821.260.71.925.914.54.349.622.867.1
    Switzerland54.613.024.854.159.441.218.418.355.930.924.2
    United Kingdom11.041.871.612.726.132.640.230.158.342.920.0
    United States18.529.97.514.335.721.210.323.548.827.544.3
    Average non-EMS324.922.527.730.535.728.326.323.035.728.333.1
    Average European non-EMS328.524.935.233.224.929.323.016.539.626.433.1
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff calculations.

    Based on the IMF’s multilateral exchange rate model (MERM) and monthly data.

    Variability is measured by the coefficient of variation (multiplied by 1,000) of monthly exchange rates.

    Unweighted average.

    Table 8.Variability of Nominal Exchange Rates Against EMS Currencies, 1974–821
    AverageAverage
    197419751976197719781974–781979198019811979–8119822
    Belgium21.317.834.512.215.820.38.16.217.010.437.8
    Denmark24.614.641.328.116.325.026.37.817.717.318.4
    France32.826.757.615.026.331.79.27.321.812.834.1
    Germany, Federal Republic of28.920.853.021.821.829.312.26.528.015.629.4
    Ireland26.533.473.216.630.136.012.16.915.511.522.0
    Italy41.818.770.320.428.736.014.111.527.917.818.6
    Netherlands21.815.039.413.216.021.19.37.522.813.222.9
    Average EMS328.221.052.818.222.128.513.07.721.514.126.2
    Austria26.512.434.813.614.020.316.96.121.014.717.0
    Canada30.342.645.442.160.444.228.030.066.541.538.1
    Japan41.931.739.340.369.444.578.988.232.866.619.9
    Norway20.316.134.128.128.125.312.424.426.721.127.9
    Sweden19.914.933.765.617.130.213.722.448.728.319.3
    Switzerland45.821.545.049.059.044.19.817.165.730.924.4
    United Kingdom24.030.067.214.627.432.635.352.344.644.121.3
    United States32.544.538.519.138.734.723.040.971.245.047.9
    Average non-EMS330.226.742.334.139.334.527.235.247.236.527.0
    Average European non-EMS327.319.043.034.229.130.517.624.541.327.822.0
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff calculations.

    Weighted average (MERM weights) of variability of bilateral nominal exchange rate against EMS currencies, with variability measured by coefficient of variation (multiplied by 1,000) of bilateral exchange rates.

    Firs t nine months only.

    Unweighted average.

    Table 9.Variability of Nominal Exchange Rates Against Non-EMS Currencies, 1974–821
    AverageAverage
    197419751976197719781974–781979198019811979–8119822
    Belgium36.640.829.431.145.736.733.843.953.143.652.3
    Denmark32.633.625.530.639.032.330.338.853.740.933.1
    France33.834.547.927.045.937.835.644.560.746.950.0
    Germany, Federal Republic of34.335.130.032.646.435.739.345.948.144.423.2
    Ireland18.147.561.425.732.337.029.143.465.045.827.5
    Italy24.828.770.626.339.938.132.053.957.847.928.5
    Netherlands35.338.935.428.845.736.832.540.657.643.624.1
    Average EMS330.837.042.928.942.136.333.244.456.644.734.1
    Austria44.038.033.435.246.939.549.945.551.549.024.9
    Canada12.916.717.034.136.123.418.318.317.017.923.3
    Japan33.322.122.159.596.746.768.364.748.560.545.5
    Norway30.540.230.734.442.435.629.930.042.934.340.2
    Sweden33.437.325.864.338.739.930.628.265.541.425.7
    Switzerland63.128.118.757.472.848.038.143.062.147.729.3
    United Kingdom25.756.482.534.448.849.654.034.479.856.126.0
    United States24.324.722.241.358.234.137.238.240.538.636.8
    Average non-EMS333.432.931.545.155.139.640.837.851.043.231.5
    Average European non-EMS339.340.038.245.149.942.540.536.260.445.729.2
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff calculations.

    Weighted average (MERM weights) of variability, measured by coefficient of variation of bilateral nominal exchange rates against the eight non EMS countries listed.

    First nine months only.

    Unweighted average.

    Table 10.Variability of Bilateral Real Exchange Rates Against EMS Currencies, 1974–821
    AverageAverage
    197419751976197719781974–781979198019811979–8119822
    Belgium31.819.331.48.519.022.017.214.010.714.037.6
    Denmark28.924.343.714.618.46.022.114.912.716.615.2
    France29.030.948.210.332.930.315.719.311.815.629.0
    Germany, Federal Republic of36.632.137.211.722.428.016.625.412.718.221.5
    Ireland25.429.346.111.825.427.622.116.815.618.211.2
    Italy24.825.048.511.021.426.122.823.812.319.617.0
    Netherlands22.619.935.711.316.321.219.214.715.316.416.1
    Average EMS328.425.841.511.322.325.919.418.413.016.921.1
    Austria24.718.929.48.515.719.414.315.110.213.212.7
    Canada32.250.338.638.757.343.432.432.968.044.434.1
    Japan31.134.335.234.866.240.385.183.326.464.925.2
    Norway21.019.329.727.226.424.720.731.724.725.725.2
    Sweden21.618.828.552.918.928.114.529.553.332.415.1
    Switzerland38.123.532.736.247.835.719.318.052.730.022.8
    United Kingdom22.723.154.516.024.328.156.660.643.453.515.7
    United States34.445.430.921.632.933.021.243.969.344.843.3
    Average non-EMS328.229.234.929.536.231.633.039.443.538.624.3
    Average European non-EMS325.620.635.028.226.627.225.131.036.931.018.3
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff calculations.

    Weighted average (MERM weights) of the variability of bilateral real exchange rates (as measured by nominal exchange rates adjusted for relative consumer price movements) against EMS countries, with variability measured by the coefficient of variation (multiplied by 1,000) of the bilateral real exchange rate.

    First nine months only.

    Unweighted average.

    Table 11.Variability of Bilateral Real Exchange Rates Against Non EMS Currencies, 1974–821
    AverageAverage
    197419751976197719781974–l781979198019811979–8119822
    Belgium42.835.731.127.940.835.736.650.656.547.948.5
    Denmark38.741.538.728.938.337.235.240.950.042.028.8
    France34.431.138.627.244.835.241.241.952.545.242.0
    Germany, Federal Republic of29.143.324.327.838.632.635.858.950.248.323.8
    Ireland25.349.336.725.629.633.329.644.552.442.218.7
    Italy26.424.049.426.436.032.548.638.151.145.926.3
    Netherlands30.636.638.425.439.834.235.148.961.448.525.5
    Average EMS332.537.436.727.038.334.437.446.353.445.730.5
    Austria35.042.730.429.639.235.443.356.555.251.726.0
    Canada13.914.917.226.536.521.822.718.322.121.020.0
    Japan30.621.428.152.684.943.584.657.059.767.151.9
    Norway23.236.628.530.339.331.636.929.852.439.731.6
    Sweden28.632.728.848.132.134.133.129.866.843.225.7
    Switzerland53.636.514.850.161.143.233.852.862.749.836.0
    United Kingdom30.030.562.633.343.040.077.236.569.861.326.2
    United States24.921.123.635.951.831.546.536.747.143.436.9
    Average non-EMS330.030.029.338.348.535.147.139.754.547.131.8
    Average European non-EMS334.135.833.038.342.936.844.742.560.349.129.1
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff calculations.

    Weighted average (MERM weights) of variability of bilateral real exchange rates against the above eight non-EMS countries as a group, with variability measured by the coefficient of variation (multiplied by 1,000) of the bilateral real exchange rate.

    First nine months only.

    Unweighted average.

    Table 12.Consumer Price Indices, 1974–82

    (Annual change in percent)

    Average1Average1
    197419751976197719781974–781979198019811979–8119822
    Belgium12.712.79.27.14.59.24.56.67.66.29.0
    Denmark15.29.69.011.110.011.09.612.311.711.210.0
    France13.711.89.69.49.110.710.813.313.312.511.8
    Germany, Federal Republic of6.96.04.33.72.74.74.15.55.95.25.4
    Ireland17.020.918.013.67.615.313.218.220.417.217.5
    Italy19.117.016.817.012.116.414.721.217.817.916.6
    Netherlands9.610.58.86.44.17.94.26.56.85.86.3
    Weighted average EMS311.510.38.67.96.28.97.610.210.09.3
    Arithmetic average EMS13.512.610.89.87.210.78.711.911.910.810.9
    Standard deviation4.24.94.94.63.54.24.56.15.65.44.7
    Difference between highest and lowest rate12.114.913.713.39.410.615.714.512.1
    Coefficient of variation0.310.390.450.470.490.420.510.510.470.500.43
    Average absolute deviation3.13.63.83.62.93.43.84.94.94.63.7
    Japan24.411.89.38.03.811.33.68.04.95.52.9
    Sweden9.99.810.311.49.910.37.313.712.111.08.8
    Switzerland9.76.71.71.60.84.03.64.16.54.75.7
    United Kingdom16.024.216.515.98.316.113.418.011.914.48.7
    United States11.09.15.86.57.68.011.313.510.411.76.2
    Arithmetic average EMS14.212.38.78.76.110.07.811.59.29.56.5
    Standard deviation6.36.95.55.43.75.64.45.43.34.42.4
    Coefficient of variation0.440.560.630.620.610.570.570.470.360.470.38
    Average absolute deviation4.84.74.04.03.04.13.64.32.83.61.8
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff estimates.

    Compound average growth rates.

    Fund staff estimates.

    Weighted by real GDP (using 1980 weights in 1981).

    Table 13.GDP Deflators, 1974–81

    (Annual change in percent)

    Average1Average1
    197419751976197719781974–781979198019811979–81
    Belgium12.212.77.77.44.28.84.04.45.04.5
    Denmark13.012.48.78.89.710.56.59.09.58.3
    France11.113.49.99.09.510.610.311.812.011.4
    Germany, Federal Republic of6.86.73.23.83.84.83.74.94.34.3
    Ireland6.422.220.112.210.614.312.614.217.314.7
    Italy18.517.518.019.513.917.515.920.817.618.1
    Netherlands9.211.28.96.35.28.14.15.05.54.9
    Weighted average EMS210.411.28.38.07.19.07.39.08.68.3
    Arithmetic average EMS11.013.710.99.68.110.68.210.010.29.5
    Standard deviation4.14.96.05.13.84.84.86.15.75.5
    Difference between highest and lowest rate12.015.516.915.710.112.116.413.3
    Coefficient of variation0.370.360.550.530.470.460.590.610.560.59
    Average absolute deviation3.33.54.63.63.23.64.14.84.74.5
    Japan20.68.16.45.74.68.92.63.02.92.8
    Sweden8.414.911.410.810.011.17.411.89.99.7
    Switzerland37.16.93.10.33.44.12.13.16.74.0
    United Kingdom14.926.914.614.010.916.115.018.812.515.4
    United States8.99.35.25.87.47.38.69.39.49.1
    Arithmetic average non-EMS12.013.28.17.37.39.67.19.28.38.2
    Standard deviation5.78.24.75.33.35.45.26.63.65.1
    Coefficient of variation0.470.60.580.720.450.570.730.720.440.63
    Average absolute deviation4.66.13.94.12.64.33.84.94.43.0
    Sources: International Monetary Fund, World Economic Outlook (various issues); and Fund staff calculations.

    Compound average growth rates.

    Weighted by real GDP (using 1980 weights in 1981).

    GNP deflator.

    Table 14.Short-Term Interest Rates, 1974–81

    (Monthly averages in percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium9.34.78.35.55.26.68.011.211.510.2
    Denmark13.36.510.314.515.412.012.616.914.814.8
    France12.97.98.69.18.09.39.011.915.312.1
    Germany, Federal Republic of9.95.04.34.43.75.56.79.512.19.4
    Ireland11.310.010.87.78.49.613.515.413.514.1
    Italy14.610.615.714.011.513.311.917.219.616.2
    Netherlands9.24.27.33.86.26.19.010.111.010.0
    Weighted average EMS111.36.57.87.36.87.98.611.713.611.3
    Arithmetic average EMS11.46.99.38.48.48.910.013.113.912.4
    Standard deviation2.32.73.54.44.03.32.83.33.12.9
    Difference between highest and lowest rate5.46.411.410.711.76.87.78.6
    Coefficient of variation0.200.390.380.520.480.390.280.250.220.24
    Average absolute deviation1.82.22.53.52.92.62.22.92.22.4
    Japan12.510.77.05.74.48.15.910.97.48.1
    Sweden7.57.87.910.07.28.18.212.214.411.6
    United Kingdom11.410.611.68.13.79.113.616.113.314.3
    United States10.55.85.15.57.97.011.213.416.413.7
    Arithmetic average non-EMS10.58.77.97.35.88.09.713.212.911.9
    Standard deviation2.22.42.72.12.12.33.42.23.93.2
    Coefficient of variation0.210.270.350.290.360.290.350.170.300.27
    Average absolute deviation1.51.91.91.71.81.82.71.62.72.3
    Source: International Monetary Fund, International Financial Statistics.

    Weighted by real GDP (using 1980 weights in 1981).

    Table 15.Long-Term Interest Rates, 1974–81

    (Monthly averages in percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium8.78.59.18.88.58.79.512.013.711.7
    Denmark14.613.113.213.414.513.815.817.718.917.5
    France10.59.59.29.69.09.69.513.015.712.7
    Germany, Federal Republic of10.48.57.86.25.87.77.48.510.48.8
    Ireland16.914.615.511.312.814.215.115.417.315.9
    Italy9.911.513.114.613.712.614.116.120.616.9
    Netherlands9.88.89.08.17.78.78.810.211.610.2
    Weighted average EMS110.49.49.48.98.59.39.511.613.711.6
    Arithmetic average EMS11.510.711.010.310.310.711.413.315.413.4
    Standard deviation3.02.52.93.03.43.03.43.33.83.5
    Difference between highest and lowest rate8.26.17.78.48.78.49.210.2
    Coefficient of variation0.260.230.270.290.330.280.300.250.240.26
    Average absolute deviation2.42.12.52.42.72.43.02.73.12.9
    Japan9.39.28.77.36.18.11.19.28.78.5
    Sweden7.88.89.39.710.19.110.511.713.511.9
    Switzerland7.26.45.04.13.35.23.54.85.64.6
    United Kingdom14.814.414.412.712.513.813.013.814.713.8
    United States8.18.27.97.78.58.19.311.413.711.5
    Arithmetic average non-EMS9.49.49.18.38.18.98.810.211.210.1
    Standard deviation3.13.03.43.23.63.33.53.43.93.6
    Coefficient of variation0.330.320.380.380.440.370.400.340.350.36
    Average absolute deviation2.12.01.92.32.72.23.32.53.33.0
    Source: International Monetary Fund, International Financial Statistics.

    Weighted by real GDP (using 1980 weights in 1981).

    Table 16.Matrix of Correlation Coefficients Between Long-Term Interest Rates, March 1976-March 1979 and April 1979-March 19821

    (Monthly averages)

    DenmarkFranceFed. Rep. of

    Germany
    IrelandItalyNetherlandsUnited

    Kingdom
    United

    States
    Belgium−0.4450.2390.7680.767−0.0120.6420.681−0.422
    0.7920.9790.8820.6630.9060.9130.7710.933
    Denmark−0.517−0.272−0.445−0.210−0.258−0.3570.573
    0.8110.6400.6020.8340.7320.6520.793
    France−0.0790.2130.6280.050−0.015−0.843
    0.9040.7180.9440.9230.7950.941
    Germany, Federal Republic of0.822−0.4610.8930.783−0.221
    0.7180.8990.9470.7420.906
    Ireland−0.1880.6670.923−0.456
    0.7410.6510.7770.753
    Italy−0.314−0.272−0.452
    0.8830.7220.822
    Netherlands0.645−0.204
    0.7880.836
    United Kingdom−0.239
    0.792
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff estimates.

    Line 1 shows the correlation coefficient for the period March 1976 to March 1979 and line 2, the correlation coefficient for the period April 1979 to March 1982.

    Table 17.Matrix of Correlation Coefficients Between Short-Term Interest Rates, March 1976-March 1979 and April 1979-March 19821

    (Monthly averages)

    DenmarkFranceFed. Rep. of

    Germany
    IrelandItalyNether landsUnited

    Kingdom
    United

    States
    Belgium0.1020.3100.4800.5320.5370.6270.601−0.290
    0.4450.5020.6290.4880.5650.4630.3400.335
    Denmark0.201−0.142−0.186−0.3710.032−0.3340.100
    0.3980.3400.6050.1750.4560.5100.120
    France0.5050.0550.4330.0500.321−0.730
    0.8090.5600.7830.644−0.0320.550
    Germany, Federal Republic of0.5600.6050.3120.763−0.454
    0.0500.8090.567−0.1510.654
    Ireland0.3880.5240.7160.043
    −0.0240.4150.800−0.052
    Italy0.1150.713−0.775
    0.436−0.0210.547
    Netherlands0.3230.210
    0.4040.262
    United Kingdom−0.392
    −0.221
    Sources: International Monetary Fund, International Financial Statistics; and Fund staff estimates.

    For every country, line 1 indicates the correlation coefficient for the three-year period (March 1976-March 1979) prior to the introduction of the EMS and line 2 indicates the correlation coefficient for the three-year period from April 1979 to March 1982.

    Table 18.Rate of Growth of Narrow Money, 1974–81

    (Annual change in percent)

    Average1Average1
    197419751976197719781974–781979198019811979–81
    Belgium6.215.77.08.35.98.62.50.22.21.6
    Denmark4.730.26.38.016.112.79.910.911.810.9
    France15.212.67.511.111.111.511.86.415.911.4
    Germany, Federal Republic of10.714.33.312.014.510.92.93.9−1.61.7
    Ireland9.019.916.922.527.619.28.114.03.48.5
    Italy9.413.518.921.426.618.023.712.99.815.5
    Netherlands12.219.78.213.24.211.52.86.0−2.42.1
    Arithmetic average EMS9.618.09.713.815.113.28.87.85.67.4
    Standard deviation3.56.15.85.99.26.17.65.07.06.5
    Coefficient of variation0.370.340.600.430.610.470.860.651.250.92
    Average absolute deviation2.64.54.74.77.03.05.44.25.95.2
    Japan11.511.112.58.213.411.33.0−2.010.03.6
    Sweden13.814.13.610.117.111.615.618.38.013.9
    Switzerland−1.44.911.27.522.98.7−2.8−0.92.7–0.4
    United Kingdom10.811.321.516.49.13.9
    United States3.15.55.98.28.16.18.05.55.56.3
    Arithmetic average non-EMS7.68.911.115.46.65.0
    Standard deviation6.43.95.95.46.98.1
    Coefficient of variation0.850.440.530.351.01.6
    Average absolute deviation5.43.34.23.95.25.6
    Source: International Monetary Fund, International Financial Statistics.

    Compound average growth rates.

    Table 19.Rate of Growth of Broad Money, 1974–811,2

    (Annual change in percent)

    Average3Average3
    197419751976197719781974–781979198019811979–81
    Belgium8.715.312.68.47.510.56.23.36.55.3
    Denmark8.426.911.79.36.412.310.211.710.810.9
    France17.815.712.314.612.214.513.98.311.111.1
    Germany, Federal Republic of7.211.57.610.310.39.45.24.63.74.5
    Ireland19.321.713.020.623.519.613.620.610.814.9
    Italy15.724.421.022.223.0*21.219.412.210.213.9
    Netherlands16.112.917.112.911.414.011.65.67.88.3
    Weighted average EMS412.816.613.314.513.814.211.57.77.99.0
    Arithmetic average EMS13.318.413.614.013.514.511.49.58.79.8
    Standard deviation5.06.04.35.57.05.64.96.02.84.6
    Coefficient of variation0.380.330.310.390.520.390.430.630.330.46
    Average absolute deviation4.55.13.14.45.64.53.64.62.33.3
    Japan11.514.513.511.113.112.78.46.810.78.6
    Sweden9.711.65.19.117.410.517.112.213.314.2
    Switzerland5.07.58.56.910.57.710.03.96.96.9
    United Kingdom12.911.69.814.612.518.4
    United States4.610.212.58.15.48.18.07.87.27.6
    Arithmetic average non-EMS8.710.29.012.211.29.8
    Standard deviation3.93.51.64.53.75.6
    Coefficient of variation0.450.340.180.370.320.57
    Average absolute deviation3.22.81.23.42.94.4
    Source: International Monetary Fund, International Financial Statistics.

    Broad money (M2) defined as money and quasi-money.

    End-of-year data.

    Compound average growth rates.

    Weighted by the broad money stock in the previous year converted into dollars using the average dollar exchange rate.

    Table 20.Rate of Growth of Domestic Credit, 1974–81

    (Annual change in percent)

    Average1Average1
    197419751976197719781974–781979198019811979–81
    Belgium10.613.816.315.210.813.314.811.512.913.1
    Denmark10.426.714.73.44.211.612.313.314.513.4
    France19.317.121.120.78.817.314.012.314.013.4
    Germany, Federal Republic of8.010.110.610.011.410.011.99.58.810.1
    Ireland19.518.112.920.430.120.130.415.315.220.1
    Italy23.823.521.416.317.420.416.016.612.615.1
    Netherlands16.514.319.723.121.018.917.210.45.911.1
    Average EMS15.417.716.715.614.815.916.712.712.013.8
    Standard deviation5.95.84.26.98.76.36.32.63.44.1
    Coefficient of variation0.380.330.250.440.590.400.380.200.280.29
    Average absolute deviation5.04.43.55.26.95.04.12.02.62.9
    Japan15.016.713.710.513.713.98.48.410.08.9
    Sweden12.813.67.811.519.513.018.213.418.616.7
    Switzerland5.96.27.16.68.66.98.911.18.59.5
    United Kingdom17.513.86.010.09.814.3
    United States9.94.48.110.311.08.711.47.78.79.3
    Average non-EMS12.210.19.012.611.411.0
    Standard deviation4.63.42.44.34.02.8
    Coefficient of variation0.370.330.270.340.350.26
    Average absolute deviation3.52.92.13.22.82.3
    Source: International Monetary Fund, International Financial Statistics.

    Compound average growth rates.

    Table 21.Real Narrow Money Stock, 1974–811

    (Annual change in percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium−5.82.7−2.01.11.0–0.6−1.8−6.0−5.1–4.3
    Denmark−9.118.8−2.5−2.85.52.00.3−1.20.1–0.3
    France1.30.7−1.91.61.80.70.9−6.12.3–1.0
    Germany, Federal Republic of3.67.8−1.08.011.56.0−1.2−1.5−7.1–3.2
    Ireland−6.8−0.8−0.97.818.63.6−4.5−3.6−14.1–7.5
    Italy−8.1−3.01.83.812.91.57.8−6.8−6.8–2.2
    Netherlands2.48.3−0.66.40.13.3−1.3−0.5−8.5–3.5
    Arithmetic average EMS–3.34.9–1.03.77.32.2–3.7–5.6–3.1
    Standard deviation5.47.41.44.07.02.13.82.65.54.0
    Coefficient of variation−1.71.5−1.41.11.01.0−0.72−1.0
    Average absolute deviation4.85.81.03.25.91.72.42.34.01.7
    Source: Tables 12 and 18.

    Deflated by the consumer price index.

    Table 22.Real Broad Money Stock, 1974–811

    (Annual change in percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium−3.52.33.11.22.91.11.6−3.1−1.1–1.0
    Denmark−5.915.82.5−1.6−3.31.50.5−0.5−0.8–0.3
    France3.63.52.54.82.83.52.8−4.4−1.9–1.2
    Germany, Federal Republic of0.35.23.26.47.44.51.1−0.9−2.1–0.7
    Ireland2.00.7−4.26.214.83.90.42.0−8.0–1.9
    Italy−2.96.33.64.49.74.34.1−7.4−6.5–3.3
    Netherlands5.92.27.66.17.05.87.1−0.80.92.4
    Arithmetic average EMS–0.15.12.53.95.93.42.5–2.2–2.8–0.8
    Standard deviation4.25.13.53.05.81.72.43.13.31.7
    Coefficient of variation−42.01.01.40.81.00.51.0−1.4−1.2–2.1
    Average absolute deviation3.53.42.02.44.41.31.82.42.61.1
    Source: Tables 12 and 19.

    Deflated by the consumer price index.

    Table 23.Real Domestic Credit, 1974–811

    (Annual change in percent)

    Average2Average2
    197419751976197719781974–781979198019811979–81
    Belgium−1.91.06.57.66.03.89.94.64.96.4
    Denmark−4.215.65.2−6.9−5.30.52.50.92.52.0
    France4.94.710.510.3−0.35.92.9−0.90.60.9
    Germany, Federal Republic of1.03.96.06.18.55.17.53.82.74.6
    Ireland2.1−2.3−4.36.020.94.115.2−2.5−4.32.4
    Italy3.95.63.9−0.64.73.51.1−3.8−4.4–2.4
    Netherlands6.33.410.015.716.210.212.53.7−0.85.0
    Arithmetic average EMS11.74.65.45.57.24.717.40.80.22.7
    Standard deviation3.85.54.97.39.02.95.43.33.63.0
    Coefficient of variation2.21.20.91.31.30.60.74.118.11.1
    Average absolute deviation2.93.53.35.26.72.04.52.82.92.3
    Source: Tables 12 and 20.

    Deflated by the consumer price index.

    Compound average growth rates.

    Table 24.Central Government Budget Deficit as a Ratio to Nominal GDP, 1974–81

    (In percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium2.84.75.15.96.04.96.58.712.29.1
    Denmark−3.03.52.82.62.81.73.74.88.35.6
    France−0.33.00.80.80.81.00.11.10.4
    Germany, Federal Republic of1.03.32.71.92.02.21.91.92.52.1
    Ireland11.813.410.810.113.311.914.114.717.215.3
    Italy8.113.19.311.815.411.511.111.013.411.8
    Netherlands0.63.13.62.93.12.74.24.66.04.9
    Weighted average EMS11.64.73.43.43.93.43.43.65.04.0
    Arithmetic average EMS3.06.35.05.116.25.15.96.58.77.0
    Standard deviation5.24.83.74.35.84.85.15.25.95.4
    Coefficient of variation1.720.760.740.840.941.00.850.800.680.78
    Average absolute deviation4.04.02.93.54.73.84.04.24.84.3
    Japan1.34.82.06.26.64.25.46.25.35.6
    Switzerland0.61.31.00.90.81.50.80.8
    United Kingdom4.28.05.43.15.15.25.45.04.14.8
    United States0.84.93.32.72.12.81.22.72.52.1
    Arithmetic average non-EMS1.74.82.93.23.53.33.43.53.23.4
    Standard deviation1.72.71.92.23.02.32.32.72.02.3
    Coefficient of variation0.970.580.650.680.860.750.690.790.620.7
    Average absolute deviation1.21.71.11.22.41.52.01.31.51.6
    Sources: International Monetary Fund, International Financial Statistics; and national authorities.

    Weighted by real GDP in the current year (using 1980 weights in 1981).

    Table 25.Budget Deficits and Changes in Money Supply, 1974–811

    (In percent)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium31.041.260.581.286.760.1170.7515.9297.8328.1
    Denmark−48.819.916.140.378.721.277.5130.4163.8123.9
    Germany, Federal Republic of38.2154.697.649.254.578.8106.8118.9189.1138.3
    France−8.827.18.112.431.214.012.4−9.936.713.1
    Ireland59.9105.697.079.856.279.7108.0124.1144.9125.7
    Italy56.160.248.340.446.050.246.156.384.362.2
    Netherlands1.5144.534.5116.7160.191.5139.3248.7288.0225.3
    Source: European Economy, No. 12 (July 1982), p. 28.

    General government borrowing requirement (+) or financial surplus (—) divided by the increase in broad money supply.

    Table 26.Balance of Payments Current Account, 1974–81

    (In billions of U.S. dollars)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium0.60.3−0.7−1.0–0.2−3.0−5.2
    Denmark−1.0−0.5−1.9−1.7−1.5–1.3−3.0−2.5−1.9–2.4
    France−5.8−0.2−5.7−3.13.3–2.31.2−7.9−7.3–4.6
    Germany, Federal Republic of10.44.13.94.19.26.3−6.1−16.5−7.2–9.9
    Ireland−0.7−0.1−0.3−0.4−0.5–0.4−1.7−1.7
    Italy−8.1−0.6−2.92.46.2–0.65.4−9.8−8.7–4.4
    Netherlands2.22.02.70.6−1.41.2−2.1−2.83.2–0.6
    Arithmetic average EMS–0.30.7–0.60.22.00.4–1.3–6.6
    Japan−4.7−0.73.710.917.55.4−8.8−10.84.8–4.9
    Sweden−0.6−0.3−1.6−2.2−0.3–1.0−2.4−4.4−2.8–3.2
    Switzerland0.22.63.53.84.42.92.4−0.62.61.5
    United Kingdom−7.7−3.5−1.62.0–2.1−1.76.912.76.0
    United States2.118.34.4−14.1−14.8–0.8−0.51.54.41.8
    Source: International Monetary Fund, International Financial Statistics.
    Table 27.The Creation of ECUs by Swap Operations, April 1979-December 1982
    Swap Operations

    Starting In
    Gold Transfers

    (million

    ounces)
    U.S. Dollar

    Transfers

    (billions)
    Gold Price

    (ECUs per

    ounce)
    US $1 =

    … ECU
    Counterpart in ECUs (billions)
    GoldU.S. dollarsTotal
    Apr. 197980.713.41650.7513.310.023.3
    July 1979185.315.91850.7315.811.627.4
    Oct. 197985.316.02110.7018.011.329.3
    Jan. 198085.515.52590.6922.210.732.9
    Apr. 198085.614.43700.7731.711.142.8
    July 198085.613.74190.7035.99.645.5
    Oct. 198085.613.94250.7136.49.946.3
    Jan. 198185.614.54470.7538.310.949.2
    Apr. 198185.714.24400.8437.712.049.7
    July 198185.712.74060.9734.812.347.1
    Oct. 198185.711.54020.9134.510.545.0
    Jan. 198285.711.73680.9231.610.742.3
    Apr. 198285.710.53271.0028.010.538.6
    July 198285.79.93241.0427.810.338.1
    Oct. 198285.710.03670.9231.510.842.3
    Dec. 198285.79.63670.9231.510.441.9
    Source: Commission of the European Communities.

    The Bank of England transferred 20 percent of its gold and U.S. dollar reserves from July 1979. The Bank of Greece has made no transfer.

    Table 28.Real Rates of Growth of Gross Domestic Product, 1974–81

    (Annual change in percent)

    Average1Average1
    197419751976197719781974–781979198019811979–81
    Belgium4.6−1.85.60.63.02.42.32.2−1.61.0
    Denmark−0.9−0.67.91.91.92.03.10.6−0.21.2
    France3.30.25.23.13.83.13.31.10.21.5
    Germany, Federal Republic of0.4−1.75.32.83.52.14.01.8−0.21.9
    Ireland4.21.51.66.36.24.02.51.31.01.6
    Italy4.1−3.65.91.92.72.24.93.9−0.22.9
    Luxembourg3.6−6.11.60.84.60.94.20.6−3.30.5
    Netherlands3.6−1.95.67.72.43.51.80.7−1.00.5
    Weighted average EMS22.3–1.45.53.13.32.63.71.7–0.31.7
    Arithmetic average EMS2.9–1.84.83.13.52.53.31.5–0.71.4
    Standard deviation2.02.32.22.51.42.11.11.11.41.2
    Coefficient of variation0.70−1.310.450.810.390.210.330.74−1.85–0.26
    Average absolute deviation1.81.81.92.21.21.81.00.91.11.0
    Japan−1.22.45.35.35.13.45.24.22.94.1
    Sweden4.32.21.2−2.01.31.44.31.8−0.81.8
    Switzerland31.7−7.7−0.42.80.4–0.62.83.91.42.7
    United Kingdom−1.8−1.02.82.23.71.21.9−2.1−2.2–0.8
    United States−0.7−1.25.45.55.02.82.8−0.41.91.4
    Arithmetic average non-EMS0.5–1.12.92.83.11.63.41.50.61.8
    Standard deviation2.54.12.53.02.22.91.32.72.12.0
    Coefficient of variation5.49−3.850.890.100.690.860.391.843.261.83
    Average absolute deviation2.02.72.01.31.82.01.10.51.71.1
    Sources: International Monetary Fund, World Economic Outlook (various issues) and Fund staff calculations.

    Compound average growth rate.

    Weighted by the real GDP in the previous year, converted into U.S. dollars using the dollar exchange rate of 1975.

    Rate of growth of real GNP.

    Table 29.Gross Fixed Capital Formation, 1974–81

    (In percent of GDP)

    AverageAverage
    197419751976197719781974–781979198019811979–81
    Belgium22.322.121.621.321.121.720.221.0
    Denmark24.021.123.022.121.722.421.018.415.618.3
    France24.323.323.322.321.422.921.421.621.021.3
    Germany, Federal Republic of21.920.720.720.720.720.921.822.822.022.2
    Ireland25.223.324.725.027.825.231.329.429.730.1
    Italy22.420.620.019.618.720.318.819.820.319.6
    Netherlands21.820.819.221.121.320.821.121.019.020.4
    Arithmetic average EMS23.121.721.821.721.822.022.222.0
    Weighted average EMS122.721.521.321.121.021.521.421.8
    Standard deviation1.31.22.01.72.81.84.13.6
    Difference between highest and lowest rate3.42.75.55.49.112.511.0
    Coefficient of variation0.060.060.090.080.130.080.180.16
    Average absolute deviation1.11.01.61.21.71.32.62.5
    Japan34.832.431.330.530.832.032.132.0
    Sweden21.521.021.121.219.420.819.920.119.219.7
    Switzerland27.624.020.620.721.422.921.823.824.623.4
    United Kingdom20.319.518.917.918.018.917.917.7
    United States15.213.914.515.916.915.317.215.915.616.2
    Arithmetic average non-EMS23.922.221.321.221.322.021.821.9
    Standard deviation7.56.86.25.65.66.36.06.4
    Coefficient of variation0.320.310.290.260.260.290.280.29
    Average absolute deviation5.94.84.03.73.84.44.14.8
    Source: International Monetary Fund, International Financial Statistics.

    Weighted by real GDP (using 1980 weights in 1981).

    Appendix II Bibliography
    International Monetary Fund

      Annual Report of the Executive Board (various issues).

      Annual Report on Exchange Arrangements and Exchange Restrictions (various issues).

      IMF Survey, Vol. 7 (December13, 1978), pp. 369, 37677, 37879; Vol. 8 (March19, 1979), pp. 81, 93; and Supplement: The European Monetary System, pp. 97100; (June18, 1979), p. 186; Vol. 10 (April6, 1981), p. 111; (December14, 1981), p. 385; Vol. 11 (March8, 1982), p. 76; (June21, 1982), pp. 18889; (July5, 1982), p. 206; Vol. 12 (April4, 1983), pp. 97, 103.

      World Economic Outlook: A Survey by the Staff of the International Monetary Fund (Washington, May1980).

      World Economic Outlook: A Survey by the Staff of the International Monetary Fund, Occasional Paper No. 4 (Washington, June1981).

      World Economic Outlook: A Survey by the Staff of the International Monetary Fund, Occasional Paper No. 9 (Washington, April1982).

    European Communities

      Treaties Establishing the European Communities: Treaties Amending These Treaties; Documents Concerning the Accession (Luxembourg, 1973).

    Commission

      “Annual Economic Review 1980–81,”European Economy, No. 7 (November1980), pp. 29129.

      “Annual Economic Review 1982–83,”European Economy, No. 14 (November1982), pp. 33148.

      “The European Monetary System–Commentary, Documents,”European Economy, No. 3 (July1979), pp. 63111.

      “European Monetary System: The First Six Months,”European Economy, No. 4 (November1979), pp. 7981.

      “The European Monetary System and Monetary Policy in the European Community,”European Economy, No. 10 (November1981), pp. 7292.

      “Documents Relating to the European Monetary System,”European Economy, No. 12 (July1982).

      Jenkins, Roy,“Europe’s Present Challenge and Future Opportunity,”speech delivered in Florence, October27, 1977.

      Jenkins, Roy,“The European Monetary System: Recent Experience and Future Prospects,”speech delivered in Rome, October1980.

    Monetary Committee

      Monetary Committee, Compendium of Community Monetary Texts, 1979 (Luxembourg, 1979).

    Official Journal

      Official Journal of the European Communities: Information and Notices, C 124, Vol. 24 (May25, 1981).

    National Authorities

      Bank of England, “Intervention Arrangements in the European Monetary System,Quarterly Review, Vol. 19 (June1979), pp. 19094.

      Banque de France, “Le Système Monétaire Européen,Service de l’Information (May1979), pp. 115.

      Banque Nationale de Belgique, “Le Système Monétaire Européen,Bulletin (July–August, 1979).

      Central Bank of Ireland, “A Guide to the Arithmetic of the EMS Exchange–Rate Mechanism,Quarterly Bulletin (Autumn1979), pp. 76100.

      Deutsche Bundesbank, “The European Monetary System: Structure and Operation,Monthly Report of the Deutsche Bundesbank, Vol. 31 (March1979), pp. 1118.

      France, Ministere de l’Economie, “Le Système Monétaire Européen,”Service de l’Information (April1979).

      United Kingdom, Chancellor of the Exchequer, The European Monetary System, Presented to Parliament by the Chancellor of the Exchequer by command of Her Majesty, November1978 (London, H.M. Stationery Office, 1978), Command PaperNo. 7405.

    Selected Other Publications

      Abraham, Jean-Paul and Michel VandenAbeele,eds., Système monétaire européen et réforme monétaire mondiale: European Monetary System and International Monetary Reform (Editions de l’Université de Bruxelles, 1981).

      Banca Nazionale del Lavoro, “The European Monetary System: The First Two Years,Quarterly Review, Vol. 34 (September1981), pp. 261370. Proceedings of the Fourth International Seminar on European Economic and Monetary Union, held atDanmarks Nationalbank, Copenhagen,March13–14, 1981.

      Baquiast, Henri,“The European Monetary System and International Monetary Relations” (with comments byRobertSolomon (ed)) in The European Monetary System: Its Promise and Prospects, Papers Prepared for a Conferenceheld at theBrookings Institution inApril1979, ed. byPhilip H.Trezise (ed) (The Brookings Institution, Washington, 1979), pp. 4959.

      Cohen, Benjamin J.,The European Monetary System: An Outsider’s View, Essays in International Finance, No. 142, International Finance Section, Princeton University (1981).

      de Vries, Tom,On the Meaning and Future of the European Monetary System, Essays in International Finance, No. 138, International Finance Section, Princeton University (1980).

      Dennis, Geoffrey E.J.,United Kingdom’s Monetary Independence and Membership of the European Monetary System,in Système monétaire européen et réforme monétaire mondiale: European Monetary System and International Monetary Reform, ed. byJean-PaulAbraham and MichelVanden Abeele (ed) (Editions de l’Université de Bruxelles, 1981), pp. 13956.

      Emerson, Michael,European Dimensions in the Problems of Adjustment,Système monétaire européen et réforme monétaire mondiale: European Monetary System and International Monetary Reform (Editions de l’Université de Bruxelles, 1981), pp. 10738.

      Gold, Joseph,SDRs, Currencies, and Gold—Fourth Survey of New Legal Developments, Pamphlet Series, No. 33, International Monetary Fund (Washington, 1980), pp. 4664.

      Haberer, Jean-Yves,“Les problèmes de l’identité monétaire Européenne,”La Revue des Deux Mondes (March1981).

      Kloten, Norbert,“Zur ‘Endphase’ des Europäischen Währungssy stems,”Internationale Anpassungsprozesse, Schriften des Vereins fur Socialpolitik, Neue Folge Band 114 (1981).

      Ludlow, Peter,The Making of the European Monetary System: A Case Study of the Politics of the European Community, Butterworth Scientific (London, 1982).

      McCarthy, Colin,EMS and the End of Ireland’s Sterling Link,Lloyds Bank ReviewNo. 136 (April1980), pp. 3042.

      McMahon, Christopher,The Long–Run Implications of the European Monetary System” (with comments byWilliam J.Fellner (ed)) in The European Monetary System: Its Promise and Prospects, Papers Prepared for a Conferenceheld at theBrookings Institution inApril1979, ed. byPhilip H.Trezise (ed) (The Brookings Institution, Washington, 1979), pp. 8196.

      Marsh, David,Sterling and the European Monetary System,The Banker, Vol. 129 (September1979), pp. 4143.

      Masera, Rainer S.“The Operation of the EMS: A European View,”Economia Internationale (November1979).

      Masera, Rainer S.,The First Two Years of the EMS: The Exchange–Rate Experience,” in “The European Monetary System: The First Two Years,Banca Nazionale del Lavoro, Quarterly Review, Vol. 34 (September1981), pp. 27186.

      Murray, C.H.,“The European Monetary System–Implications for Ireland,”Central Bank of Ireland, Annual Report, 1979.

      Ortoli, François–Xavier,The European Community Looks at Monetary Integration,Deutsche Bundesbank, Auszüge aus Presseartikeln, No. 15 (February26, 1979), pp. 35.

      Padoa-Schioppa, Tommaso,The EMF: Topics for Discussion,Proceedings of the Second International Seminar on European Economic and Monetary Union, Geneva, December7–8, 1979, Banca Nazionale del Lavoro, Quarterly Review, Vol. 33 (September1980), pp. 31743.

      Polak, J.J.,The EMF: External Relations,Proceedings of the Second International Seminar on European Economic and Monetary Union, Geneva, December7–8, 1979, Banca Nazionale del Lavoro, Quarterly Review, Vol. 33 (September1980), pp. 35972.

      Rey, Jean–Jacques,Les Techniques du Système Monétaire Européen,Aussenwirtschaft, Vol. 34 (June1979), pp. 15864.

      Rey, Jean–Jacques,Some Comments on the Merits and Limits of the Indicator of Divergence of the European Monetary System,Revue de la Banque, No. 1 (1982), pp. 315.

      Rieke, Wolfgang,“Das Europäische Währungssystem,”Deutsche Bundesbank, Auszüge aus Presseartikeln (March17, 1980).

      Salop, Joanne,The Divergence Indicator: A Technical Note,International Monetary Fund, Staff Papers, Vol. 28 (December1981), pp. 68297.

      Schlüter, Peter–W.,Die ECU und der Europäische Wahrungsfonds,Integration 2/82 (April1982), pp. 5473.

      Scholl, Franz,Praktische Erfahrungen mit dem Europälischen Währungssystem,Probleme der Währungspolitik, Schriften des Vereins für Socialpolitik, Neue Folge Band 120, 1981, pp. 15171.

      Solomon, Robert,An American View of the EMS,Deutsche Bundesbank, Auszüge aus Presseartikeln, No. 15 (February26, 1979), pp. 67.

      Thygesen, Niels,The Emerging European Monetary System: Precursors, First Steps and Policy Options,” in “EMS: The Emerging European Monetary System,Papers and Proceedings of the First International Seminar on the EMSheld atLouvain-la-Neuve, March24–25, 1979, by JohnWilliamson, AlexandreLamfalussy, NielsThygesen, (ed)et.al. Ed. byRobertTriffin (ed). Bulletin de la Banque Nationale de Belgique (April1979), pp. 87125.

      Thygesen, Niels,Are Monetary Policies and Performances Converging?” (with a comment byWolfgangRieke (ed)) in “The European Monetary System: The First Two Years,Banca Nazionale del Lavoro, Quarterly Review, Vol. 34 (September1981), pp. 297326.

      Trezise, Philip H.,ed., The European Monetary System: Its Promise and Prospects, Papers Prepared for a Conferenceheld at theBrookings Institution in April1979, (The Brookings Institution, Washington, 1979).

      Triffin, Robert,The European Monetary System and How it Fits into the International Monetary System,Economia, Vol. 3 (Lisbon, October1979), pp. 53761.

      Ungerer, Horst,The European Monetary System,International Monetary Fund, IMF Survey, Supplement (March19, 1979), pp. 97100.

      U.S. Congress, Joint Economic Committee and Committee on Banking, Finance, and Urban Affairs, The European Monetary System: Problems and Prospects, 96th Congress, 1st Session (Washington, Government Printing Office, 1979).

      van Ypersele de Strihou, Jacques, “The Future of the European Monetary System,Revue de la Banque, No. 2 (1981), pp. 17995.

      Vaubel, Roland,The Return to the New European Monetary System: Objectives, Incentives, Perspectives,Monetary Institutions and the Policy Process, Carnegie–Rochester Conference Series on Public Policy, Vol. 13 (Autumn, 1980), pp. 173221.

      Werner, Pierre,Du Plan Werner au système monétaire européen,Bulletin de documentation, Service Information et Presse, Luxembourg (March1980), pp. 17.

      Williamson, John, AlexandreLamfalussy, NielsThygesen,et. al., “EMS: The Emerging European Monetary System,Papers and Proceedings of the First International Seminar on the EMSheld atLouvain-la-Neuve, March24–25, 1979. Ed. byRobertTriffin. (ed)Bulletin de la Banque Nationale de Belgique (April1979), pp. 3186.

    In 1978, the members of the European Community were Belgium, Denmark, France, the Federal Republic of Germany, Ireland, Italy, Luxembourg, the Netherlands, and the United Kingdom. Greece became a member on January 1, 1981.

    Relevant documents concerning the EMS have been published by the Commission of the European Communities in: European Economy, No. 3 (July 1979). (Hereinafter referred to as European Economy, with relevant issue number and date.) For the Resolution see also International Monetary Fund, IMF Survey, December 13, 1978, pp. 376–77.

    See European Economy, No. 3 (July 1979), p. 94.

    For details, see International Monetary Fund, IMF Survey, March 19, 1979, Supplement: The European Monetary System, pp. 97–100. Additional literature is listed in the bibliography.

    Throughout the paper, the terms “participating countries,” “participating currencies,” “EMS countries,” or “EMS currencies” refer to those EC countries or to those currencies of the central banks which are participating in the exchange rate mechanism of the EMS, thus excluding the pound sterling.

    ECU 1 = US$0.97 on December 30, 1982.

    The United Kingdom, although not a participant in the exchange rate mechanism, in July 1979 decided to voluntarily contribute 20 percent of its gold and U.S. dollar reserves to the EMCF against ECUs.

    European Council Resolution of December 5, 1978, paragraph A.3.2. See European Economy, No. 3 (July 1979), p. 95.

    It should be noted, however, that in an integrated system of a limited number of exchange rates, all participating currencies are affected by action on one or more exchange rates. This is clearly shown by the fact that the adjustment of any number of ECU central rates of EMS currencies leads to simultaneous changes in the ECU central rates of all EMS currencies.

    It should be kept in mind, however, that the weaker currencies left the “snake” at various times and subsequently depreciated significantly.

    Chart 1 depicts the history of the ECU/dollar rate, and Chart 2 illustrates the positions of the member currencies within the EMS band. Chart 3 shows the ECU exchange rates of the participating currencies.

    Detailed information on all the realignments is provided in Tables 36. Tables 35 provide information on market rates and their changes, and Table 6 outlines policy measures taken in connection with realignments.

    The agreement setting up the Belgian–Luxembourg Economic Union (BLEU) entered into force on May 1, 1922 and includes a special protocol providing for a monetary association between the two countries. In accordance with a Luxembourg decree, the Luxembourg franc is at par with the Belgian franc.

    In Chart 4 and Table 7, variability is measured by 1,000 times the coefficient of variation of the nominal effective exchange rate (monthly data).

    If the indirect effects of EMS exchange rates on third currencies also in the baskets were taken into account, these shares would be even higher.

    In a way, the behavior of real exchange rates is not relevant here since the stabilizing effect of a system with fixed exchange rates affects in the short run only nominal exchange rates. On the other hand, developments of real exchange rates reveal whether divergencies between exchange rates and cost and price developments arise or whether such divergencies have been compensated for by changes in central rates. Hence, developments in real exchange rates can be seen as composite indicators for the stability of nominal exchange rates and the achievement of convergence in cost and price developments.

    The Commission of the European Communities introduced a useful distinction between “convergence of nominal variables,” such as costs and prices, and “convergence of real variables,” such as living standards and quality of life. See European Economy, No. 12 (July 1982), p. 14. This publication contains many documents and technical studies relating to the EMS.

    European Communities, Treaties Establishing the European Communities: Treaties Amending These Treaties; Documents Concerning the Accession (Luxembourg, 1973), p. 173.

    See December 5, 1978 Resolution of the European Council, Section B in European Economy, No. 3 (July 1979), p. 97.

    See December 5, 1978 Resolution in European Economy, No. 3 (July 1979), p. 95.

    See, for example, “Conclusions of the Presidency” of the European Council Meeting in Luxembourg, April 27–28, 1980, in: Bulletin of the European Communities, No. 4 (1980), p. 10; European Economy, No. 12 (July 1982), pp. 14, 40, and 42; and European Economy, No. 14 (November 1982), p. 94.

    See, for example, European Economy (July 1982), “Part One Economic Convergence and the European Monetary System,” Michael Emerson, “European Dimensions in the Problems of Adjustment,” European Monetary System and International Monetary Reform, Editions de l’Université de Bruxelles (Brussels, 1981), pp. 107–38, and Niels Thygesen, “Are Monetary Policies and Performances Converging?” (with a comment by Wolfgang Rieke) in “The European Monetary System: The First Two Years,” Banca Nationale del Lavoro, Quarterly Review (September 1981), pp. 297–326.

    Because annual expansion rates have continued to fluctuate widely for individual countries, average annual dispersion measures, nevertheless, remain high.

    For details see International Monetary Fund, IMF Survey (March 19, 1979), Supplement: The European Monetary System, p. 98. For further literature on the functioning of the divergence indicator, see bibliography, in particular, Jean–Jacques Rey, “Some Comments on the Merits and Limits of the Indicator of Divergence of the European Monetary System,” Revue de la Banque, No. 1 (1982), pp. 3–15 and Joanne Salop, “The Divergence Indicator: A Technical Note,” International Monetary Fund, Staff Papers, Vol. 28 (December 1981), pp. 682–97.

    European Economy, No. 12 (July 1982), p. 44.

    On December 30, 1982, equivalent to SDR 5.25 billion.

    European Economy, No. 3 (July 1979), p. 95.

    Ibid.

    For the full text of the proposals, see European Economy, No. 12 (July 1982), Annex D, pp. 88–91.

    European Economy, No. 3 (July 1979), p. 96.

    European Communities, Treaties Establishing the European Communities: Treaties Amending These Treaties; Documents Concerning the Accession (Luxembourg, 1973), p. 173.

    European Economy, No. 12 (July 1982), pp. 35–36.

    Article IV, Section 3(b), Articles of Agreement of the International Monetary Fund (Washington, D.C., 1978).

    As mentioned earlier, the short–term monetary support and the medium–term financial assistance facilities, as well as the Community loan mechanism, can be used not only by those countries who actively participate in the EMS but also by the other EC member countries that is, Greece and the United Kingdom.

    Decision No. 6056–(79/38), March 2, 1979, Selected Decisions of the International Monetary Fund and Selected Documents, Ninth Issue (Washington, June 15, 1981), p. 20.

    The Twenty–Second Report on the Activities of the Monetary Committee, Official Journal of the European Communities, C 124, Vol. 24 (May 25, 1981), p. 14.

    Ibid., pp. 12–19.

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