Paying for monetary freedom
Article Abstract:
The crisis in the European exchange rate mechanism (ERM) means the EC should either adopt a single currency immediately or abandon it completely. The main currencies have mostly been linked since the pre-First World War gold standard. Exchange rate fluctuations are usually followed by trade restrictions. The Danish refusal of the Maastricht treaty and German reunification undermined the ERM. The German Bundesbank refusal to cut interest rates on Jul 29, 1993, demonstrated its lack of international commitment.
Publication Name: The Independent
Subject: Retail industry
ISSN: 0951-9467
Year: 1993
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Marching with the mark
Article Abstract:
The European Monetary System or Exchange Rate Mechanism (ERM) exists to stabilise the European economy. Governments maintain their exchange rates through intervention and borrowing foreign currency. The German central bank, the Bundesbank, is independent and has never devalued the mark against any other currency in the EMS. Germany's interest rates are high since unification but interest rates were cut in Sep 1992 in exchange for lira devaluation. The effects on British interest rates are explained.
Publication Name: The Independent
Subject: Retail industry
ISSN: 0951-9467
Year: 1992
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The system self-destructs
Article Abstract:
The exchange rate mechanism may fail as five of its 11 currencies have devalued and/or been suspended from it since Sep 1992. The economic principles of the ERM are unsuitable for the individual governments. Investors prefer German marks because of their good record, but reunification in 1990 altered the economy. The ERM should be altered to be more flexible.The system would be better based on a multilateral currency.
Publication Name: The Independent
Subject: Retail industry
ISSN: 0951-9467
Year: 1993
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