| 1969: |
The
first policy statements in favor of creating a single currency
approved by the Heads of State or Governments of the Member States
of the EEC |
| 1970: |
The
Werner Report outlines a three-stage process for creating the
EMU by 1980 |
| 1972: |
The
'Snake' formed - an exchange rate system linking the currencies
of the Member States. The 'Snake' floundered on a series of international
economic disturbances: the collapse of the Bretton Woods exchange
rate system and the ensuing currency turbulance; divergent economic
policy responses to the emergence of 'stagflation' by the governments
of the Member States; and the oil price increases of 1973 and
1978 |
| 1979: |
European
Monetary System (EMS) developed. On the initiative of the French
President, Valery Giscard d'Estaing and the German Chancellor,
Helmut Schmidt, a second attempt is made to achieve currency stability
within the EEC. The EMS was a more developed version of the 'Snake'.
The EMS had three principal components:
- The
European Currency Unit (ecu) - a new European currency,
where each unit was a weighted average of all EMS currencies.
The ecu was only used for transactions between central banks
in the EMS.
- Exchange
Rate Mechanism (ERM) - each participating currency was fixed
against the ecu and allowed to float within a margin of
2.25% of the fixed rate.
- Credit
facility - the central banks of ERM Member States had access
to credit with the EC, with which to support their currency
should it threaten to move beyond the 2.25% margins. In
addition, the central banks of all ERM Member States were
obliged to cooperate in supporting any currency that threatened
to move outside the 2.25% margins.
Of
the EEC Member States in 1979, only the UK opted to remain
outside of the ERM.
|
| 198X: |
EC
Member States' exchange rates become much more stable in the 1980s
under the ERM. Between 1980-1985, exchange rate fluctuations were
half the level they had been between 1975-1979, and between 1986-1989,
the level of fluctuations were halved again. |
| 1989 |
The
Delors Report, like the Werner Report before it, proposed a three-stage
process to Monetary Union, due to culminate in the abolition of
national currencies in the year 2002 (see 'What
is the timeline for the EMU?'). |
