Abstract
EMS credibility Axel Weber This article provides a quantitative assessment of the credibility of the European Monetary System during the disinflation period of the 1980s. The results contradict the widely held view that the EMS has operated as a DM-zone. It is shown that, after a brief early phase, the EMS has functioned as a bipolar system with a hard currency option supplied by the German Bundesbank and a soft currency option offered by the Banque de France. Whilst from the onset the Netherlands have chosen the hard currency option, at least in a first stage the remaining smaller economies, Belgium, Denmark and Ireland, adopted the soft currency alternative. At a later stage of the EMS, however, the soft currency block has disintegrated and some countries, most noticeably Ireland and to a lesser extent France, have shifted towards the ‘hard currency’ standard. It is argued that this increased tightening of the EMS provides a favourable starting condition for the transition to Economic and Monetary Union.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
