Exchange Rate Mechanism

   Introduced as part of the European Monetary System in 1979, the ERM was the first stage of a plan for closer financial integration within the European Union. It was designed to minimise currency- exchange fluctuation among the countries which belonged to the system. Each participating country had an exchange rate against the European Currency Unit (the ECU), which was a basket of national currencies. Each currency was supposed to fluctuate within an agreed margin on either side of the central exchange rate. For several years, membership of theERMwas seen as a means of creating monetary stability among member states. Britain joined in October 1990, the pound being allowed to operate within a broad margin of 6 per cent. But after a period of unprecedented international currency speculation culminating in the events of Black Wednesday, it left on the 16 September 1992.

Glossary of UK Government and Politics . 2013.

Look at other dictionaries:

  • Exchange Rate Mechanism — (ERM) One of the components for the establishment of the single European currency. It provided a central exchange rate for national currencies against the European Currency Unit, thereby intending to stabilise exchange rates, encourage trade… …   Law dictionary

  • Exchange Rate Mechanism — noun A former arrangement to regulate exchange rate fluctuations between participating currencies in the EMS by fixing their rates, and limiting fluctuation, against the ECU (abbrev ERM) • • • Main Entry: ↑exchange …   Useful english dictionary

  • Exchange Rate Mechanism — (ERM) method for protection of a stable exchange rate, part of a monetary organization of the EEC that began working in 1999 …   English contemporary dictionary

  • Exchange Rate Mechanism — ( ERM) The methodology by which members of the EMS maintain their currency exchange rates within an agreed upon range with respect to other member countries. Bloomberg Financial Dictionary * * * Exchange Rate Mechanism Exˈchange Rate ˌMechanism… …   Financial and business terms

  • exchange rate mechanism — ex change rate .mechanism n [U] ERM a system for controlling the exchange rate between the money of one country and that of another …   Dictionary of contemporary English

  • exchange rate mechanism — noun (U) a system for controlling the exchange rate between the money of one country and that of another; erm …   Longman dictionary of contemporary English

  • exchange rate mechanism — /ɪks tʃeɪndʒ reɪt ˌmekənɪz(ə)m/ noun a method of stabilising exchange rates within the European Monetary System, where currencies could only move up or down within a narrow band (usually 2.25% either way, but for certain currencies widened to 6%) …   Dictionary of banking and finance

  • exchange-rate mechanism — ➡ ERM. * * * …   Universalium

  • Exchange Rate Mechanism — ERM See: European Monetary System …   Accounting dictionary

  • Exchange Rate Mechanism — ERM See European Monetary System …   Big dictionary of business and management

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