Abstract

The broad nature and objectives of the EMS were clearly laid out by the European Council on various occasions during the period leading up to the establishment of the system.17 The objectives essentially are: the creation a “zone of monetary stability in Europe” by means of close monetary cooperation; and the provision of a basis for coordination of exchange rate management relative to the rest of the world. The original plan also contemplated the consolidation of the scheme within two years from the start of its operations into a system that would include the creation of a European monetary fund and the establishment of a European currency unit as a reserve asset and means of settlement. In the event, this timetable could not be adhered to and the consolidation of the EMS into a permanent institutional structure has been postponed indefinitely.18