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The European Monetary System (December 6, 1978)

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The third important difference is that this ECU system is a cocktail, a basket made up of the nine currencies, and the currencies are mixed into this cocktail at varying weights. This ECU system, in addition to the existing parity grid of exchange rates, will serve as an indicator for deviations. As I said earlier, however, this indicator does not trigger any obligation for intervention, but it can, for instance, trigger an obligation for consultation.

I think that two things experienced in the “snake” exchange-rate cooperation system will be reconfirmed in the larger circle of participants: First, that exchange-rate stability leads all participants in the national economy to greater trust in the stability of their own currency and monetary situations, to greater trust in the reliability of the calculability of business decisions, commercial decisions, and to greater trust in the ability to forecast the outcome of a business or commercial operation that one joins today, but that first yields results in another two or three years.

Second, another thing experienced in the “snake” will also be reconfirmed here; namely, a greater solidarity among the participating countries.

Since I mentioned the “snake,” I also have to mention – I consider it important – that the heads of government of Belgium, Holland, the Federal Republic of Germany, Luxembourg, and Denmark determined yesterday that this “snake” will be maintained and will continue to function until the moment the new monetary system becomes operational. That is, they have declared that they are not considering any changes in their exchange rates. [ . . . ]

Source: “Europäisches Währungssystem, Regierungserklärung von Bundeskanzler Schmidt über die Ergebnisse des Europäischen Rates in Brüssel am 6. Dezember 1978” [“Policy Statement by Federal Chancellor Helmut Schmidt on the Results of the Session of the European Council in Brussels, December 6, 1978”], in Bulletin (Press und Information Office of the Federal Government), December 8, 1978, no. 146, pp. 1353-57.

Translation: Allison Brown

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