ABSTRACT
The European Monetary System (EMS) was established in 1979 after almost a decade of unprecedented exchange rate volatility and rapid global inflation. The objective of member countries was ‘to create a zone of monetary stability’ within the European Union (EU). By stating their goal in such broad terms, its architects intended to make clear that the aim of the EMS was not just to stabilise exchange rates; in addition, EMS members accepted an obligation to pursue a common, anti-inflationary policy.
