Abstract
Operational experience with the EMS, coupled with theoretical analysis,1 have convinced me that a system of fixed exchange rates that can be adjusted discretely, and which therefore offers substantial opportunities for speculative profits, will be difficult to maintain in conditions of complete capital mobility, even with unlimited very-short-term reciprocal lines of credit in place. We are faced with a difficult road ahead, but the leitmotif of this chapter is ‘keep going and you won’t stop’.
I am grateful to S. Del Punta, G. Faustini, F. Guelpa and N. Sartor for their comments on an earlier draft of this chapter.
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Notes
M. Obstfeld, ‘Competitiveness, Realignments and Speculation: the Role of Financial Markets’, in Giavazzi, F., Micossi, S. and Miller, M. (eds) The European Monetary System (Cambridge University Press, 1988) and C. Wyplosz, ‘Capital Controls and Balance of Payments’, Journal of International Money and Finance, June 1986.
For a systemic approach to the problem of the efficiency of international monetary systems, cf. G. Basevi, ‘Il sistema dei cambi’, in T. Padoa-Schioppa (ed.) Il sistema dei cambi oggi (Bologna: Il Mulino, 1986).
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© 1990 Piero Ferri
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Masera, R.S. (1990). The European Monetary System Ten Years On: Problems and Perspectives. In: Ferri, P. (eds) Prospects for the European Monetary System. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11629-4_10
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DOI: https://doi.org/10.1007/978-1-349-11629-4_10
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