European
Monetary System
lIn March 1979 the European Monetary System (EMS) was established to help establish an economic and monetary
union.
lInitial
plans to reach complete EMU by 1980 were overly optimistic; currencies of member states fluctuated
against each other,
and the devaluation of some currencies limited economic growth and led to high inflation.
lA common European Currency
Unit (ECU) was introduced by which
the central exchange rates could be set and weighted according to the economic importance of each country.
lThe
EMS helped lower inflation rates in the EC and eased the economic shock of global currency fluctuations during
the 1980s.
