Abstract
Operational experience with the European Monetary System (EMS), coupled with theoretical analysis (see, in particular, Obstfeld, 1988 and Wyplosz, 1986), have convinced me that a system of fixed exchange rates that can be adjusted discretely, and which therefore offers substantial opportunities for speculative profits, will be difficult to maintain under conditions of complete capital mobility, even with unlimited very short-term reciprocal lines of credit in place. We are faced with a difficult road ahead, but the leit-motiv of this paper is ‘keep going and you won’t stop’.
I am grateful to I. Cipolletta, S. Del Punta, G. Faustini, F. Guelpa and N. Sartor for their comments on an earlier draft of this paper.
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© 1991 International Economic Association
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Masera, R.S. (1991). The European Monetary System Ten Years On: The System’s Architecture, Problems and Perspectives. In: Nerlove, M. (eds) Issues in Contemporary Economics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11576-1_7
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DOI: https://doi.org/10.1007/978-1-349-11576-1_7
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