Exchange Rate Mechanism


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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.

Exchange Rate Mechanism

Used prior to the adoption of the euro, a method for reconciling differing exchange rates between currencies, allowing participation in the single European currency. Established in 1979, it was known as a "semi-pegged" system in which currencies were variable with respect to each other only within a certain range. After the introduction of the euro in 1999, the exchange rate mechanism was replaced by ERM II, which reconciles exchange rates for countries wishing to join the eurozone.

exchange rate mechanism (ERM)

see EUROPEAN MONETARY SYSTEM.
References in periodicals archive ?
Third, now that the Exchange Rate Mechanism is relevant over the whole period, some of the formerly significant country dummies, such as those for Germany and France, become insignificant, suggesting that their influence was partly due to the effects of the Exchange Rate Mechanism.
The launch of the RMB spot and foreign exchange derivatives market will help provide more transparency and efficiency to the foreign exchange market in China and help build an exchange rate mechanism for the Chinese currency.
The cabinet also removed an explicit reference In the analysis to avoid setting an entry date now and not to join the pre-euro ERM-2 exchange rate mechanism next year.
The pound is now heading towards parity with the euro as its strength plunges, bringing back painful memories of the currency's troubles when it made its ungainly exit from the exchange rate mechanism in 1992.
BRITAIN faced economic turmoil on this day in 1992 when the Conservative government suspended Britain's membership of the European Exchange Rate Mechanism.
The pound was last equal to US$2 in 1992, the year the UK was forced to leave the European Exchange Rate Mechanism.
He reminded MPs that the top Tory was working as an adviser to then-Chancellor Norman Lamont on the day Britain crashed out of the Exchange Rate Mechanism.
09 yuan per dollar, belying Chinese assertions that the new exchange rate mechanism would reflect market conditions.
The People's Bank of China has made reviewing its fixed exchange rate mechanism for the yuan a priority for 2004, sources at the Chinese central bank said late Wednesday, indicating the bank may allow the yuan to trade more flexibly on the currency market.
If the accession countries are tied into even the exchange rate mechanism, much less the monetary union, that will be felt in higher inflation rates in those countries as they catch up to the rest of Europe.
1979 - The European Monetary System (EMS) is created, with the exchange rate mechanism (ERM) defining rates in relation to the European Currency Unit (ECU).
The poll results were released by organisers of the campaign against the euro on the 10th anniversary of Black Wednesday, when Britain crashed out of the Exchange Rate Mechanism.