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A Large Outsider's View of the EMS

1991; Emerald Publishing Limited; Linguagem: Inglês

10.1016/b978-0-444-89083-2.50037-5

0573-8555

Sven W. Arndt,

This chapter presents a few ideas and views of the EMS. The analysis of trade and monetary integration has traditionally focused on the implications for member countries, while paying relatively scant attention to its effects on outsiders. A European Community with a centralized monetary system is likely to have a larger effect on world monetary, exchange rate, and macro conditions than one composed of many decentralized monetary policy regimes. Increased global monetary influence is, moreover, compatible with a considerable range of specific monetary regimes—including greater policy harmonization in a modified EMS, various types of permanently fixed exchange rate systems, and currency union. There is some evidence that such a trade-off may have been in effect during the first 10 years of the present EMS system. In EMS-type exchange rate regimes, convergence of inflation is a key collective policy objective. Both the completion of the internal European market and further integration in the monetary sphere have the potential of enhancing or diminishing world-wide monetary and macroeconomic stability.