III Performance of the EMS, 1979–87
Author:
International Monetary Fund
Search for other papers by International Monetary Fund in
Current site
Google Scholar Close
Language:
English
Print Publication Date:
15 Sep 1988
Keywords:
OP; EMS; economy; balance of payments adjustment mechanism; policy error; EEC currency; monetary policy coordination; EMS scheme; Exchange rates; Monetary base; Inflation; Currencies; Monetary unions; Europe; money stock; U.S. dollar; Ems country; EMS currency; dollar exchange rate; Demand for money

Abstract

This section is divided into three parts. The first analyzes the degree of convergence of inflation rates, exchange rates, and interest rates achieved so far by EMS members participating in the exchange rate mechanism (ERM)12 and discusses whether the establishment of the EMS has contributed to the reduction of inflation in member countries. Existing studies on the degree of convergence will be surveyed and new updated results based on the “principal component analysis” will be presented. In light of these considerations, we then discuss the leading role of the Federal Republic of Germany within the EMS and analyze the contribution that German monetary policy has made to the reduction of inflation in the system. Finally, the working of the balance of payments adjustment mechanism within the EMS will be described, as well as the problems arising from monetary targeting and from sterilization of international reserve flows.

Within Same Series

Other IMF Content

Other Publishers Content

  • Collapse
  • Expand
Cover Policy Coordination in the European Monetary System
Policy Coordination in the European Monetary System
Occa Paper 61
ISBN:
9781557750280
ISSN:
0251-6365
Publication Date:
15 Sep 1988
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557750280.084
Pages:
100