ABSTRACT
The 1993 collapse of the European Monetary System (EMS) marks a setback in the movement towards European Monetary Union (EMU). The decision to adopt a 30 percent corridor around the bilateral target rate constitutes a step backwards on the way towards the full monetary union envisaged in the Maastricht Treaty. This development casts doubt about the future of the common monetary system and whether EMU will be reached according to the timetable determined in the Maastricht Treaty. After a successful history and following a time without realignments in the five years preceding September 1992, with the removal of capital controls and with new entrants into the Exchange Rate Mechanism (ERM), the question arises how this sudden shift can be explained.
