EMS

abbreviation (Business World) Short for European Monetary System, a financial arrangement which consists primarily of an exchange-rate mechanism (ERM) linking the currencies of some EC member countries to the ecu so as to limit excessive fluctuations in exchange rates, and common credit facilities. Etymology: The initial letters of European Monetary System. History and Usage: The EMS was set up in the late seventies, after the failure of the 'snake' to regulate currency fluctuations in Europe. It grew out of dissatisfaction among politicians from some EC countries (notably the former British Chancellor of the Exchequer Roy Jenkins, Helmut Schmidt of West Germany, and Val÷ry Giscard d'Estaing of France) with the slow progress of plans for economic and monetary union (see EMU° below). By the time EMS was formally accepted by the European Council in 1978 and put into effect in March 1979, the British government was not prepared to participate fully in it, declining to take part in the exchange rate mechanism which is the core of the system. EMS was widely discussed in the British newspapers during the late eighties, as plans for EMU began to move forward, the single European market of 1992 approached, and pressure increased on the UK to join EMS. There was a concentration of uses of the term during 1988-9, when it was reported that the then Chancellor of the Exchequer Nigel Lawson favoured British participation as a way of controlling inflation, but could not break Prime Minister Margaret Thatcher's opposition to it. This deadlock eventually contributed to Mr Lawson's resignation in October 1989. His successor, John Major, took the UK into the ERM in October 1990, even though the so-called Madrid conditions had not been met. Given the existence of the EMS, our continuing non-participation in the ERM cannot fail to cast practical doubt on that resolve [to beat inflation]. Nigel Lawson quoted in The Times Guide to 1992 (1990), p.107 Sterling quickly lost the big early gains that followed ERM entry. But its ability to hold pre-EMS levels is no mean feat. Financial Times 5 Nov. 1990, section 1, p. 19