European Monetary System (EMS)

The European Monetary System (EMS) was an exchange-rate agreement between the currencies of some of the member States of the European Economic Community (EEC). The EEC was a forerunner to the European Union. The EMS was created in 1979 and ran until 1999. Its point was to support the aims of European economic integration and monetary policy co-ordination. Through the Exchange Rate Mechanism, the EMS created a series of adjustable exchange-rate bands to limit volatility between member States’ currencies, and support the value of the European Currency Unit (ECU), the EEC’s notional currency basket and unit of account that came into existence when the EMS was created. The ECU was a forerunner of the euro. The EMS was succeeded by Economic and Monetary Union (cf.).