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?').

Sources & Further Information:

Part II. EMU [1] [2] [3] [4] [5] [6] [7] [8] [9] [10]