European Monetary System o Eleven European countries maintain exchange rates among their currencies within narrow bands and jointly float against outside currencies ● Objectives To establish a zone of monetary stability in Europe To coordinate exchange rate policies vis-a-vis non- European currencies To pave the way for the European Monetary Union McGraw-Hilylrwoin 2-13 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 2-13 European Monetary System ⚫ Eleven European countries maintain exchange rates among their currencies within narrow bands, and jointly float against outside currencies. ⚫ Objectives: ◼ To establish a zone of monetary stability in Europe. ◼ To coordinate exchange rate policies vis-à-vis non￾European currencies. ◼ To pave the way for the European Monetary Union