Part I The European Monetary System: A Balance Between Rules and Discretion
Author:
International Monetary Fund
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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
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Abstract

Over the last four decades, one area that has evolved rapidly in the international economy, albeit not without periodic setbacks, has been the domain of economic interdependence. As noted by Cooper (1968) early on,1 the increasingly close linkages that interdependence has prompted among national economies can either enhance or constrain their ability to pursue domestic objectives. From this vantage point, adaptation to economic interdependence can thus be described as a process that requires a demarcation of the boundaries of national freedom, an endeavor in which it is often useful to distinguish between systems based mainly on rules and regimes that lean instead on discretionary action.2 The issues involved in the process of demarcation and the distinction between the two types of systems are not exclusive to international economic relations, and examples of similar issues are numerous in other forms of country interactions. But the requirements of the process in most, if not all, areas call for the development of commonly agreed norms by reference to which the outer limits to individual country freedom can be established.

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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
Chart 1.

Movement of EMS Currency Exchange Rates Against the ECU

(Monthly averages, July 1979 = 100)
Chart 2.

Movements of the ECU Against the U.S. Dollar

(U.S. dollar per ECU, monthly averages)
Chart 3.

EMS: Position in the Narrow Band1
Chart 4.

EMS: Position in the Wide Band1
Chart 5.

EMS: Narrow Money

(Annual percentage changes)1
Chart 6.

EMS: Broad Money

(Annual percentage changes)1
Chart 7.

EMS: Domestic Credit

(Annual percentage changes)1
Chart 8.

EMS: Central Government Balances

(In percent of GDP)
Chart 9.

EMS: Consumer Prices

(Annual percentage changes)
Chart 10.

EMS: GDP Deflators

(Annual percentage changes)
Chart 11.

EMS: Short-Term Interest Rates

(In percent)
Chart 12.

EMS: Long-Term Interest Rates

(In percent)
Chart 13.

EMS: External Current Accounts

(In percent of GDP)
Chart 14.

EMS: Growth of Real GDP

(In percent)