European Monetary System (european monetary system, ems)
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European Monetary System Overview
In late September 1992, the European foreign exchange market atmosphere filled with a hard-fought, one of the German central bank is the central bank, led by members of the European Monetary System, determined to protect the mark against the pound sterling, the Italian lira exchange rate, continue in the foreign exchange Mark the market to buy the pound and the lira throw the other is speculative foreign exchange market forces, combined with seemed to work against the central bank, the British pound and the lira throwing buy Mark. In the fierce fighting in the foreign exchange market, the central bank has thrown more than 200 billion U.S. dollars mark, market speculators were all eating. Finally, this contest to the European Central Bank to maintain the mark and sterling weakness, fixed exchange rates and scope of the lira lost, sterling and the lira were forced out of the European Monetary System in the end. Many large venture capital investment group in this month earned tens of millions of dollars, the most earned nearly one billion U.S. dollars. In fact, the seeds of the crisis of the European Monetary System is produced from the European Monetary System planted on this day onwards. March 1979, at the initiative of the German Chancellor and the French President, the EEC's eight member states (France, Germany, Italy, Belgium, Denmark, Ireland, Luxembourg and the Netherlands) decided to create the European Monetary System (european monetary system, ems), the exchange rate of national currencies and other fixed and floating together on the dollar. In the 10 years after the establishment of the European Monetary System, its internal fixed exchange rates constantly adjust, so that its exchange rate regime to survive. June 1989, Spain announced to join the European Monetary System, in October 1990, Britain announced the addition, the members of the European Monetary System was expanded to 10. Inside the European Monetary System exchange rate system is not completely fixed currency exchange rate between the member states have a range of fluctuation. Each member of both monetary and European Currency Unit (ecu) _set_ a central rate, the exchange rate fluctuations up and down in the market of plus or minus 2.5% against the pound is 6%. Because Mark is the strongest of the European Monetary System currencies, Mark is one of the most important on the international foreign exchange market trading currency, people will often fluctuate member states of the European Monetary System exchange rate of the currency and Mark, as a sign of central bank intervention. The following are the boundaries of December 17, 1992, the Member States monetary and exchange rate fluctuations in the mark, exceeding the upper and lower limits, the Central Bank of the State concerned must intervene. As the pound and the lira has quit in September 16, mark them with the exchange rate volatility should be given back to them when the European Monetary System. The method of the European Monetary System central bank intervention in foreign exchange markets States is that each member of the 20% gold and dollar reserves to the European Monetary Cooperation Fund, and in exchange for a corresponding number of European Currency Unit. If a member of the central bank needs to intervene in the national currency's exchange rate with the mark, it can be used in the hands of the European currency unit, or other forms of international reserves to buy the domestic currency to another member country central banks, and thus the foreign exchange market intervention. According to regulations, exchange rate fluctuations between the Member States of any two currencies outside the specified range, central banks in both countries have an obligation to intervene, the intervention should be required to share the burden of the cost. However, the actual situation is not necessarily the case. Because under normal circumstances, when a member of the monetary and exchange rate close to Mark upper or lower limit, the central bank will tend to raise the alarm, or direct intervention. And Germany has no obligation to intervene. Therefore, the burden of the central bank is also possible to transfer the intervention of the transfer have many ways.
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The formation of the European Monetary System
European Payments Union was founded in 1950, this is the start of European monetary integration. March 1957, "Treaty of Rome", decided to _set_ up the European Economic Community. In 1958, "European Monetary Agreement" in lieu of the European Payments Union. EC Summit in December 1969 in The Hague decided to establish the European Economic and Monetary Union. October 1970, "Werner Report" announced that it is to achieve the European Economic and Monetary Union provides for a transitional period of ten years, the league is divided into three phases to achieve the goal. March 1971 agreement, decided to officially implement the monetary union plan. Early 1972, the EC Council of Ministers before embarked on a monetary union measures. In April 1978, held in Copenhagen EC summit, proposed the motion to establish the European Monetary System (european monetary system, ems)'s. In the same year on December 5 in Brussels, the European Union heads of agreement, decided to create the European Monetary System on January 1, 1979, after a dispute over the former Federal Republic of Germany and France occurred in the institutional agricultural trade compensation, delayed until March 13 the same year was formally established.
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The main content of the European Monetary System
European Monetary System is essentially a fixed adjustable exchange rate system. It includes three aspects: (A) European Currency Unit (european currency unit, ecu) (B) establish mechanisms (exchange rate mechanism, erm) exchange rate stability 1 parity network system (grid parity system) 2. Currency basket system (basket parity system) 3 interventions (C) the creation of a European Monetary Fund (european monetary fund, emf)
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The achievements of the European Monetary System
1 It is largely weakened the dollar's dominance; (2) Since the parity network system stability of the European Monetary System exchange rate of EC economic and trade development in the country has an invaluable role; 3. Use the European currency unit continues to expand within each range, has become second only to the U.S. dollar and German mark of the most important reserve as_set_.
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European Monetary System Problems
1. The economic development of all key members of the European Monetary System imbalance 2 limitations. Exchange rate mechanism of the European Monetary System 3. European Currency Unit identified themselves pregnant with contradictions 4 European Monetary Fund failed to establish
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European Monetary System crisis
European Monetary System on 5 December 1978 the European Council decided to create, March 13, 1979 was officially established, and its essence is adjustable to a fixed exchange rate regime. Its operating mechanism has two basic elements: First, the currency basket - European Currency Unit (ecu); Second grid system - exchange rate regime. European currency unit is a basket of currencies was 12 EC member states composed of currency, the proportion of the size of the Member States in which the share of money is determined by their respective economic strength. European Monetary System exchange rate regime to the European currency unit as the center, so that the currency pegged to the Member States and the European Currency Unit, and then make money through the European Currency Unit members identified bilateral fixed exchange rate. This exchange rate system is called grid system, or parity net. European Currency Unit established itself breeds a certain contradiction. The strength of the EC member states are not fixed, once the change to a certain extent, it requires Member States currency weights are adjusted. Although changes in the weights specified once every five years, but if unable to find the strength or timely changes failed to detect changes found strength or found unable to adjust, adjust spontaneously through the market will make the European Monetary System a crisis. In mid-September 1992, a place in the European money markets since World War II, the most serious monetary crisis, the fundamental reason is the increasing strength of Germany broke the balance of power within the European Community. Germany's economic strength was due to German reunification and greatly enhanced, although the share of the European currency unit using the German mark in Mark said not to pay, but the mark against the dollar rises, the relative share of Mark in the European currency unit is also rising. Because the European currency unit is the EC Member States commodity exchanges of labor and capital flows unit of account, or change the value of the German mark monetary policy not only about macroeconomic Germany and other members of the EC macroeconomic also greater impact. Britain and Italy has been sluggish economy is slow growth, increased unemployment, low interest rates, they need to implement policies to reduce borrowing costs, allow enterprises to increase investment, expand employment, increase production, and stimulate consumer to perk economy. But then, after German reunification, Germany appears on a huge fiscal deficit, the government worried that triggered inflation, causing the expansion of the low-pass accustomed to German discontent erupted political and social issues. Thus, the inflation rate was 3.5 percent in Germany not only rejected the last seven summits requires its request to cut interest rates, but in July 1992 the discount rate rose to 8.75 percent. Thus, the high interest rates caused the German foreign exchange markets to sell sterling, the lira and the wave of panic buying mark, causing the lira and sterling exchange rate fell, which is the direct cause of 92 years of European monetary crisis. First, the German interest rates react to the Nordic Finland. FIM automatically linked with the German mark, after raising interest rates in Germany, the Finnish markka Finns have replaced the German mark, the Finnish markka in September against the German mark exchange rate continued to fall. Finland's central bank was forced to sell the German mark to maintain parity buy Finnish markka, but still diarrhea Finnish markka not limited DM Finnish central bank, in September 8 Finnish Finnish government suddenly announced that Mark DM decoupling, float freely. Finnish markka and the decoupling of the German mark became the fuse of this monetary crisis At that time the British and French governments on the seriousness of the problem and deeply to the German Government's proposal to lower interest rates, but the Germans considered negligible Finnish markka decoupling, the British and French governments rejected the proposal, the German central bank governor Schlesinger on September 11 publicly announced, Germany will not lower interest rates. The goal put the speculation turned to continue with impunity after strong German mark currency market speculators get this message. September 12, has been an emergency Italian lira soft currency exchange rates all the way down, down to the maximum limit of the exchange rate mechanism of the European Monetary System exchange rate of the lira against the mark within the European Monetary System. In this case, although the Italian government was in the 7th and the 9th has 2 times to raise the bank rate from 12% to 15%, while the foreign exchange market sell-off mark and franc, but failed to ease outsiders . September 13 lira devaluation of the Italian government had announced, will cut 3.5 percent of its parity, while the other 10 currencies of the European Monetary System will be appreciated by 3.5%, which is since January 12, 1987 the first European Monetary System parity adjustment. By this time, the German government was running out of the European Monetary System to maintain and make minor concessions, on September 14 announced to reduce the discount rate half a percentage point from 8.75% to 8.25%, which is the first in Germany in five years once cut. Germany, which shipped in one fell swoop by the high appreciation of the U.S. and British law, but it was too late, a bigger storm blowing in the UK foreign exchange market. Germany announced cuts in the day, the pound exchange rate all the way down, the pound broke through parity with the mark of three defense reach one pound equals 2.78 marks. Pound plunged to make the British government in disarray, on the 16th morning announced to raise bank interest rate two percentage points, and hours later announced an increase of 3 percentage points, the rate increased from 10% to 15%. 2 times a day to raise interest rates in the UK is unique in modern history. The purpose of this unusual move to England is to attract foreign short-term capital inflows, increased demand for pounds sterling to stabilize the exchange rate. However, subtle changes in the market is that once confidence has been shaken, the trend has become, movements in exchange rates would be difficult to deter it. British pound plunged, announced its withdrawal from the European Monetary System From 15 September 1992 to 16, the central banks inject billions of pounds sterling financial support, but to no avail. 16 pounds with Mark parity and the day before by a one pound equals one pound equals 2.78 marks fell to 2.64 marks, the pound and the dollar also fell to its lowest level equals one pound of $ 1.738. After the exhaustion of all organs, September 16 evening, the British Chancellor of the Exchequer Lamont announced Britain from the European monetary system and reduce the interest rate by 3 percentage points, 17 am again lower interest rates by 2 percentage points, restored to its original level of 10% . After the 13th Italian lira devaluation, only separated by three days and again in crisis in the foreign exchange market, Mark of the lira's exchange rate parity over again after the fall re-adjust the boundaries of the Italian government in order to save the value of the lira fell to spend 40 No one trillion liras reserves the final work, had announced the lira from the European monetary system, let it float freely. EC finance officials held an emergency meeting for up to six hours after the announced intention of the two countries agreed to Britain from the European Monetary System temporarily, Spain game tower devalued by 5%. From January 1987 to September 1992, more than five years within the European Monetary System exchange rate adjustment time only once, and in 92 years 13 to 16 September, within three days on a secondary adjustment The severity of visible European currency crisis. Until September 1992 20 French citizens voted in favor of its central idea is to establish a culture of politics in the country is still a big difference between the United States of Europe as a political entity approximation, its members not only want to use the same currency, but also was pursuing a common foreign and security policy, "Maas 特赫 Treaty", only to make the European currency turmoil temporarily calmed down, pound, after the devaluation of the lira tend balanced state. Lessons European currency crisis This currency crisis, there are many profound lessons, only to ensure that Hong Kong's financial market stability is concerned, there are important revelation, which is to strengthen the international monetary and financial policy coordination and cooperation. Western European financial turmoil in September, largely reflecting the major industrial countries EC uncoordinated monetary and financial policies. Germany was in its growing economic strength, strong in the case of Mark, but also paranoid in their own interests, regardless of the Anglo-Italian bilateral economy has been sluggish, but for their own economic development requirements to lower interest rates, not only rejected the Seven Summit requires its appeal cuts, but to raise interest rates. In the case of Finland, the German Mark was forced decoupling with Mark, also unaware of the operating mechanism to maintain the European monetary system urgency, even openly declared its interest rate will not be reduced. Wait until the foreign exchange market storm began, it announced that it would reduce its discount rate half a percentage point, but only to the foreign exchange market speculators to such expectations, that is, they think of Germany in the past to raise interest rates to curb inflation, lower interest rates now inflation is merely a concession. Of course, not all the fault of the crisis blamed Germany, however, needs to be emphasized is that in economic integration, globalization today, despite various economic contradictions between countries growing, but no country can insist that countries can only In cooperation and coordination in order to obtain stable development. The world is moving in international cooperation and policy coordination in the direction of this trend has now become an irreversible trend. The so-called policy coordination is to carry out certain common macroeconomic policy adjustment, and economic activities of mutual economic relations between the joint intervention in order to achieve mutual benefit purposes. This is mainly due to the spillover effects of national economic policies (spill-overeffect), a country that adopted policies tend to affect the economy of other countries. Thus, countries adopt economic policies that will promote the coordinated development of world economy, and their own ways, often have adverse consequences
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Wikipedia Encyclopedia
Ouzhou Huobi Tixi European Monetary System European Monetary System, EMS European Community member countries to strengthen political and economic cooperation and the establishment of the currency of the Group. Designed to prevent the dollar crisis, the development of economic relations between the Community member states, and the establishment of a stable currency area in Europe, in order to promote economic development in Europe and monetary integration process. March 13, 1979 came into effect. Produces the 1970s, the decline of the U.S. economy, a sharp deterioration in foreign trade situation, in August 1971 announced the U.S. to stop the conversion of gold, the same year in December and in February 1973 the dollar has devalued twice, respectively, 7.89% and 10%, causing the West forex market chaos. National currencies can not maintain a fixed exchange rate against the U.S. dollar, have adopted a floating exchange rate, dollar-centric international monetary system collapse. At that time, most of the countries of the European Community in order to maintain monetary ties to promote economic exchanges, the decision to implement the currency is still a fixed exchange rate between the Community Member States to provide a fixed ratio, fluctuations of not more than 2.25 percent against the U.S. dollar and other currencies to implement joint floating exchange rate. Countries began with the participation of eight, namely Federal Republic of Germany, France, the Netherlands, Belgium, Luxembourg, Denmark, 6 Community member states, as well as Sweden, Norway, the two associated countries. Although Britain joined the Community, but sterling instability, continue to implement a separate floating; Ireland and Italy are also the same reason unable to attend. 1977 dollars a serious crisis broke out again, causing volatility in European currency exchange rates directly affect the stability of the joint float system. Faced with this situation, the SADC countries decided to further strengthen cooperation. First, build the European Monetary System by the European Commission President R. Jenkins on October 17, 1977 at the University of Florence made a speech about the re-launch of Economic and Monetary Union raised, after which the Board initiated the preparation of re-launching currency outline Union, in July 1978 on a European Union summit held in Bremen and the European Council held in Brussels in December the same year of consultations, adopted a resolution on the establishment of the European Monetary System. Belgium, Denmark, Luxembourg, the Federal Republic of Germany, the Netherlands and France immediately agreed to participate in the European Monetary System; Italy and Ireland in the same year in December announced its membership; Britain temporarily to participate, but agreed to guarantee the implementation of the pound against the currencies of other European Union countries to maintain exchange rate stability policy. European Monetary System scheduled for January 1, 1979 to implement, but due to a dispute between France and the Federal Republic of Germany and other member states occur on agricultural prices extended amount of monetary compensation issues. After repeated consultations, mutual concessions, only to come into effect on March 13, 1979 resolution. ① main content creation European Currency Unit, which is a "basket of currencies" (ie, in determining a country's exchange rate of its currency, _select_ the currencies of certain countries as a currency, and their hooks, and as calculating and adjusting their exchange rates standards, this is the choice of a currency is called the "basket" currency), no cash but with the various functions of money, credit valuation between EC countries, the unit of _set_tlement payments, also a member of part of the country's foreign exchange reserves. This is the core of the European monetary system, money is weighted by the EC Member States synthesis. The weights of each currency is mainly based on the gross national product of the Member States and weighted by the proportion depending on the volume of trade within the European Community. European Commission European Currency Unit quotations prepared daily according to market conditions. Initially, the European currency unit European unit of account for the same proportion of each member's currency, determined in the implementation of the European Monetary System after six months, after which adjusted once every five years; during the five years, if a 25% of the change in the weighted number of currencies (including sterling) actually occurred, they can be required to adjust. ② provides for a fixed exchange rate between the currency of the Member States, the implementation of a floating exchange rate system for the non-member currency. However, there are requirements among Member States currency exchange rate fluctuations on the center and around the center of the lower rate of 2.25% each; volatility of the Italian lira on the lower limit allowed to expand to 6%. If a particular currency fluctuations exceed the limits specified in the relevant countries should take measures to correct it. ③ preparing to _set_ up a European Monetary Fund to strengthen the power of intervention in the market and the provision of credit. This is a lending institution of the European Monetary System intended to replace the European Monetary Cooperation Fund established. According to the plan, it is independent of national governments, the European Union member states of the Central Bank Management Committee, to provide loans to member countries, intervention centers and stable member currency exchange market, ensuring the balance of payments of Member States . According to the resolution establishing the European monetary system, Member States should pay its gold, 20% of foreign exchange reserves as a European Monetary Fund, an initial total of 25 billion European currency units, of which 14 billion for short-term credit, 11 billion for the medium-term fiscal credit. Each member has a certain lending quotas. Since the Member States have different views, the establishment of the European Monetary Fund's plan has not been implemented. In addition to the European Monetary System in 1979 to establish the participation of eight EC members abroad, June 19, 1989 Spain formally joined, as of the end of March 1991, 12 countries in the European Union, have not yet joined the system in the United Kingdom, Greece and Portugal. The stability of the European Monetary System member currency exchange rates, off_set_ the impact of fluctuations in the U.S. dollar to strengthen intra-EC trade, and promote the further development and economic integration of Europe, have played a positive role. (Zhao new)
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English Expression
: EMS European Monetary System
Containing Phrases
EMS European Monetary System conjuncture
EMS European Monetary System resume
Ems european monetary system of buildup
Ems european monetary system creative background
Ems european monetary system of Arch content
Ems european monetary system Acquire of accomplish