The exchange rate mechanism of the European monetary system

Quarterly Bulletin 1990 Q4
Published on 01 December 1990

On Monday 8 October sterling joined the exchange rate mechanism of the European monetary system with a central rate of 0.696904 against the ECU and a bilateral central rate against the deutschemark of £1 = DM 2. 95; it will initially operate in the wider 6% band. This article describes the mechanism and sets out the intervention obligations of the participating central banks. The intervention obligations are summarised in the parity grid-a matrix showing the various bilateral central and intervention rates.

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