DP15340 Imported or Home Grown? The 1992-3 EMS Crisis

Author(s):	Barry Eichengreen, Alain Naef
Publication Date:	October 2020
Date Revised:	November 2021
Keyword(s):	Currency Crisis, ERM, European Monetary System, Foreign exchange market intervention
JEL(s):	E5, F31, N14, N24
Programme Areas:	Economic History, International Macroeconomics and Finance
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=15340

Using newly assembled data on foreign exchange market intervention, we construct a daily index of exchange market pressure during the 1992-3 crisis in the European Monetary System, allowing us to pinpoint when and where the crisis was most severe. Our analysis focuses on a neglected factor in the crisis: the role of the weak dollar in intra-EMS tensions. We provide new evidence of the contribution of a falling dollar-Deutschmark exchange rate to pressure on EMS currencies