European Monetary System

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You can help expand this article with text translated from the corresponding article in French. (November 2024) Click [show] for important translation instructions. Machine translation, like DeepL or Google Translate, is a useful starting point for translations, but translators must revise errors as necessary and confirm that the translation is accurate, rather than simply copy-pasting machine-translated text into the English Wikipedia. Consider adding a topic to this template: there are already 1,628 articles in the main category, and specifying|topic= will aid in categorization. Do not translate text that appears unreliable or low-quality. If possible, verify the text with references provided in the foreign-language article. You must provide copyright attribution in the edit summary accompanying your translation by providing an interlanguage link to the source of your translation. A model attribution edit summary is Content in this edit is translated from the existing French Wikipedia article at [[:fr:Système monétaire européen]]; see its history for attribution. You may also add the template {{Translated|fr|Système monétaire européen}} to the talk page. For more guidance, see Wikipedia:Translation.

The European Monetary System (EMS) was a multilateral adjustable exchange rate agreement in which most of the nations of the European Economic Community (EEC) linked their currencies to prevent large fluctuations in relative value. It was initiated in 1979 under then President of the European Commission Roy Jenkins ^{[citation needed]} as an agreement among the Member States of the EEC to foster monetary policy co-operation among their Central Banks for the purpose of managing inter-community exchange rates and financing exchange market interventions.^[1]

The EMS functioned by adjusting nominal and real exchange rates, thus establishing closer monetary cooperation and creating a zone of monetary stability.^[2][3] As part of the EMS, the EEC established the first European Exchange Rate Mechanism (ERM) which calculated exchange rates for each currency^[1] and a European Currency Unit (ECU): an accounting currency unit that was a weighted average of the currencies of the 12 participating states.^[4][5] The ERM let exchange rates to fluctuate within fixed margins, allowing for some variation while limiting economic risks and maintaining liquidity.^[6]

The European Monetary System lasted from 1979 to 1999, when it was succeeded by the Economic and Monetary Union (EMU) and exchange rates for Eurozone countries were fixed against the new currency the Euro.^[7] The ERM was replaced at the same time with the current Exchange Rate Mechanism (ERM II).