EVOLUTION OF MONETARY SYSTEMS IN EUROPEAN

EUROPEAN ideal exchange-rate system is one that allows high levels of predictability of relative prices while ensuring smooth adjustment to economic shocks. In a  ell functioning
system, people can trade and invest in other countries without worrying that exchange rates will suddenly change and make their ventures unprofitable. This ideal seemed to be attained-during most of the Bretton Woods era, when exchange-rate changes were infrequent yet output and trade grew rapidly.

In the last decade, however, fixed-exchange-rate systems have more often been sources of instability than stability. Fixed-exchange-rate systems were the subject of intense speculative attack that reached global proportions on three occasions during the 1990s: in Europe in 1991-1992, in Mexico in 1994- 1995, and in East Asia in 1997-1998. In this subsection, we describe some of the pitfalls of fixed exchange- rate systems and chart the evolution of the European Monetary Union .from a fixed-rate system to a common currency.

[av_button label='Get Any Economics Assignment Solved for US$ 55' link='manually,http://economicskey.com/buy-now' link_target='' color='red' custom_bg='#444444' custom_font='#ffffff' size='large' position='center' icon_select='yes' icon='ue859' font='entypo-fontello']

Share This