European Monetary System
(EMS) A financial system formed in March 1979 to develop closer cooperation in monetary policy among members of the European Community in advance of the liberalization of capital. It included the Exchange Rate Mechanism (ERM) to stabilize exchange rates between member states as a precursor to European Monetary Union. Directive 88/361 removed restrictions on the movement of capital between people resident in the member states. Article 102A of the Single European Act 1986 inserted a new Article (now called Article 98) into the Treaty of Rome to refer to the EMS. |