The European rate of exchange group is a multilateral intervention system between European currencies and goes on the agreement from Basel (10.4.1972) (references currency snake or queue in the tunnel) back, in which the ten member countries of the European community at that time had agreed upon first a bilateral intervention system of its currencies in relation to the US Dollar. This was official an agreement between the central banks of the member states of the community over the decrease of the ranges of its currencies (in English: Basel Agreement OF 10 April 1972, implemented on 24 April 1972, the cent ral between bank OF the Member States OF the Community on the narrowing OF the margins OF fluctuation).

Due to the fact that the US Dollar was devalued in February 1973 ten per cent opposite the gold, it adjusted the European central banks the interventions for their currencies opposite the USD, held however between some their currencies by a mutual intervention system to firm, but flexible rates of exchange. In this "European rate of exchange group" of the central banks 12.3.1973 participated first the following six currencies after an explanation of the advice of the European communities of (in the official abbreviations and designations at that time: BFR - Danish Krone - Danmark, DM - Federal Republic of Germany, FF - France, LFR - Grand Duchy of Luxemb (o) urg, horizontal stabilizer - Nederland).

The desire for stable rates of exchange within Europe had arranged the EEC states to these steps. The connection to the US Dollar proved as unfavorable. Thus a "multilateral" became intervention system between European currencies from a "bilateral intervention system" in relation to the US Dollar, in which each central bank involved on its foreign exchange market with reaching the full range (intervention rates) either its currency with credits of the other central banks buy or its own currency deliver (sell) had.

In the time thereafter also different pushed, even a "non--EEC currency" like the Norwegian crown (Norsk more kroner), to this "European rate of exchange group" in addition. Although up and devaluations of the currencies involved were intended, numerous Beitritte and again withdrawals showed from currencies that the conditions for this currency group were improvement worthy.

Therefore the EEC governments decided the introduction of the European monetary system (EMS) in the year 1979 as successor of the "European rate of exchange group".

See also

George Soros

Articles in category "European rate of exchange group"

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