DP285 Can the EMS Be Exported? Lessons from Ten Years of Monetary Policy Coordination in Europe

Author(s): Francesco Giavazzi, Alberto Giovannini
Publication Date: January 1989
Keyword(s): European Monetary System, Exchange Rates, Expectations, Seigniorage
JEL(s): 423, 431, 432, 443
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=285

This paper addresses the question of whether the European Monetary System can be copied outside Europe. Our answer is negative. The presence of the EC and the dependence of EC institutions on exchange rate stability lend credibility to EMS exchange rate targets in a way that would not be present, say, among the United States, Europe and Japan. The EMS has also reproduced previous experiences of fixed exchange rates by not imposing the exchange rate constraint symmetrically on all member countries: the System has de facto worked as a Deutschmark zone, confirming that the institution of fixed rates per se cannot induce international monetary cooperati.