Interrelation between European Currencies ERMII Katerina Manova, Zornitsa Angelova - PowerPoint PPT Presentation

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Interrelation between European Currencies ERMII Katerina Manova, Zornitsa Angelova

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Exchange rate fluctuation margins of the main European currencies to /-2.25 ... For EU non euro area member states. Currencies fixed to euro and allowed /-15 ... – PowerPoint PPT presentation

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Title: Interrelation between European Currencies ERMII Katerina Manova, Zornitsa Angelova


1
Interrelation between European Currencies
(ERMII) Katerina Manova, Zornitsa
Angelova
2
The Snake
  • Created 1972
  • Exchange rate fluctuation margins of the main
    European currencies to /-2.25  around a central
    rate
  • Collapse in 1974

3
(No Transcript)
4
European Monetary System
  • Established in 1978
  • Foundations ECU and ERM
  • /-2.25 fluctuation band around the central rate
    fixed to the ECU
  • Foreign reserves intervention

5
ERMII
  • Came in force 1999
  • For EU non euro area member states
  • Currencies fixed to euro and allowed /-15
    fluctuations
  • Decisions taken by Governing Council of ECB plus
    ministers and governors of national non euro area
    central banks
  • Interventions at the margin and intra-marginal
    interventions

6
ERMII cont.
  • Creation of very short term credit facilities
  • Not binding but necessary participation
  • Created to facilitate trade in the Single
    European Market
  • Stability and easier convergence

7
  • Countries that have joined ERM II
  • Countries that have not met the criteria for ERM
    II

8
  • Slovenia

0.10 1.00 2.00
9
  • Malta

0.10 1.00 2.00
10
  • Bulgaria

On the waiting list
11

  • Romania
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