The EMS crisis in 1992-1993 as an argument for common currency

Abstract

The article analyzes the crisis of the European Monetary System and financial turbulences in 1992-1993. The attention is paid to problems of coordination of the EC Member States' monetary policies as well as to the experimentation with the exchange rate regime with the aim to reach the exchange rate stability among the EC Member States.

The emergence of the EMU can be seen as the product of a trial-and-error process which delivered the single currency only after other options in organizing monetary and exchange rate affairs had been exercised and subsequently abandoned due to their intrinsic weaknesses.

Keywords

• European economic integration
• common currency
• Maastricht convergence criteria
• exchange rate systems
• monetary policy
• optimum currency areas