Abstract

The EMS has now been in existence for nearly ten years. The experience gathered over this period has been sufficiently varied to provide arguments for both proponents and critics of the system. In itself, this is not particularly surprising given the interdependence stressed above between the objectives and instruments of policy coordination. A commitment to common objectives is bound to bring about a measure of policy coordination, particularly in a setting like the EMS where certain rules prevail about the conduct of such coordination. However, the discretion that remains available in the EMS for independent policy action is just as capable of bringing about instances of policy divergence. This said, however, a consensus seems to have emerged that the evidence derived from developments in the EMS provides little support for the skepticism and concerns voiced initially in a variety of circles about the prospects and durability of the system.26 On the one hand, as pointed out by Artis (1987), the system not only remains in place but has also exhibited the necessary flexibility required to elicit and maintain the required cohesion. On the other hand, expectations that such flexibility would lead the system into a regime of unduly frequent exchange rate adjustments of the crawling-peg-type have not materialized, as noted by Ungerer, and others (1986).27