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Exchange Rate Mechanism (ERM)
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A commitment on the part of members of the European Monetary System (EMS)-most members of the European Economic Community (EC)-to maintain relatively fixed currency exchange rates. For most member currencies, fluctuations around a bilateral central rate with regard to each other currency in the ECU are to be maintained at plus or minus 2 1/4 percent from an agreed upon relationship. Tables of current minimum and maximum exchange rate parity relationships have been used to predict exchange rate intervention and central bank monetary policies.
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Glossary *
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