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Monetary Policy and the EMS

  • John Driffill
  • Paul Turner
Part of the Southampton Series in International Economics book series (SOSIE)

Abstract

There exists no clear-cut argument either in favour of or against UK membership in the exchange mechanism of the EMS. The arguments that it will entail the UK in further losses of sovereignty and freedom of independent action in monetary policy are ranged against the view that membership will enhance the credibility of the government’s anti-inflationary stance and allow the economy to enjoy the benefits of lower interest rates, closer to those of Germany. In 1989 the Chancellor of the Exchequer, Nigel Lawson, favoured entry while Prime Minister Margaret Thatcher’s camp did not. Meanwhile, as the arguments in the UK go backwards and forwards, in Europe as a whole the movement towards integration proceeds. For monetary policy and exchange rates this means increasing the coordination of monetary policies, reducing the variation in exchange rates, and removing controls on transactions associated with capital movements. Further ahead is foreseen more complete monetary union with a single currency and a European central bank.

Keywords

Exchange Rate Interest Rate Monetary Policy Central Bank Fiscal Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. European Commission, (April 1989) Committee for the Study of Economic and Monetary Union, Report on Economic and Monetary Union in the European Community, (Delors Report), Brussels.Google Scholar
  2. Giavazzi, F. and Giovannini, A. (1988) ‘The role of the exchange rate regime in a disinflation: empirical evidence on the EMS’, in Giavazzi, F., Micossi, S. and Miller, M. (eds), The European Monetary System, Cambridge University Press.CrossRefGoogle Scholar
  3. van Ypersele, J. and Koeune, J.-C. (1985) The European Monetary System, EC Commission, Brussels...Google Scholar

Copyright information

© George McKenzie and Anthony J. Venables 1991

Authors and Affiliations

  • John Driffill
  • Paul Turner

There are no affiliations available

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