The-European-Monetary-System-

THEEUROPEANMONETARYSYSTEMJean-JacquesRey*Oneofthemainshortcomingsexperiencedintheworkingoftheinterna-tionalmonetarysystemduringtheseventieshasbeenthedegreeofex-change-rateinstabilitywhichwasallowedtodevelop.However,whereasthefirsthalfofthisdecadewitnessedanincreasedpropensitytofreeexchangeratesfromanyofficialcommitment,thesecondhalfshowedarenewedconcernforgreaterdisciplineinthisfield.'ThedecisiontosetupaEuropeanMonetarySystem(EMS)isthemostvisibleevidenceofthisnewtrend.TheEMShasbeenineffectsince13March1979.ThelabelSystemisindeedwellchosen.Thereareatleastthreereasonswhyitadequatelyqualifieswhatisatstake.First,theEMSisintendedtoprovideanelementofcontrasttothenon-system7'whichwasallowedtodevelopafterthecollapseoftheBrettonWoodsparvaluesystemandthesubsequentfailureofmonetaryauthoritiestoagreeonacomprehensiveschemeforworldmonetaryre-form.WhilethesecondamendmenttotheArticlesofAgreementoftheInternationalMonetaryFundhelpedtorestorefullcomplianceofex-change-ratepracticeswiththelegalcommitmentsenteredinto,thiswasachievedbyadjustinglawtopractice,notthereverse.TheemphasislaidbytheEuropeanCouncilontheobjectiveofachievingazoneofmone-tarystabilityinEuropeM2impliesthatexistingworldarrangementswerenotregardedasleading,bythemselves,tothekindofmonetarystabilitydeemeddesirableforEurope.Secondly,thewordSystemhadnotbeenusedbeforetodesignatetheinitiativesformerlytakenandthearrangementsformerlyconcludedtopromotemonetaryintegrationwithintheCommunity.Whiletherearemanyelementsofcontinuity,fromatechnicalpointofview,between*ChargkdecowsaI'UniversitklibredeBruxelles.1.Thefirstofficialsignofdissatisfactionwiththeworkingofthefloatingexchange-rateregimewasdisplayedattheSummitConferenceofRambouillet,inNovember1975:seepoint12oftheDeclarationofRambouillet,17November1975,publishedinDeutscheBundesbank,AusziigeausPresseartikelnno.79,21November1975,pp.1-2.2.ResolutionoftheEuropeanCouncilof5December1978ontheestablishmentoftheEuropeanMonetarySystem(EMS)andrelatedmatters,paragraphA.1.1,publishedinCommitteeofGovernorsoftheCentralBanksoftheMemberStatesoftheEuropeanEconomicCommunity,TextsconcerningtheEuropeanMonetarySystem,1979,p.43.0Sijthoff&NoordhoSfInternationalPublishers,AlphenaandenRijn17C.M.L.Rev.1980,7-30theseformerarrangementsandtheEMS,thechoiceofanewdesignationservestohighlightthepoliticalwilltosignalanewstart.Itishoweverremarkablethatnoreferencewhatsoeverismade,inthelegalset-upoftheEMS,totheResolutionoftheCouncilandoftheRepresentativesoftheGovernmentsoftheMemberStatesof21March1972,3whichhadinitiatedboththenarrowmargins(orsnake)agreementandthefirstphaseoftheeconomicandmonetaryunion.Infact,thewholequestionoftherelationshipbetweentheEMSandthefinalgoalofeconomicandmonetaryunionremainsunre~olved.~Thirdly,theEMSinvolvesawidespectrumoflegalinstruments,Com-munityinstitutionsandpolicyareas,whichmakeitappropriatetorefertothewholesetasaSystem,muchthesamewayasonereferstotheinternationalmonetarysystemortotheinternationaltradingsystem.ThedelineationbetweenareasbelongingtotheEMSandareasoutsidetheEMSisbynomeansunambiguou~.~Theaimofthepresentcontributionisnottodescribethefullback-groundordetailedworkingsoftheEMS:thishasbeenappropriatelydoneelsewheree6NorisittoprovideanelaboratediscussionoftherelationshipbetweentheEMSandCorllmunitylawingeneral:thisisbeyondtheauthor'sc~rnpetence.~Themainfocusofthiscontributionisanattempttoenhancetheunder-standingofthepainfulprocessofgeneratingandimplementinglegalpro-xiisionsinthefieldofinternationalmonetaryrelations,asitishighlightedbythegeneralconceptionandtheworkingoftheEuropeanMonetarySystem.Referencewilloccasionallybemadetoothersystemsofinterna-tionalmonetaryrelations,suchasthatoftheInternationalMonetaryFundorthatoftheformerEECnarrowmargins7'agreement.3.J.O.1972,C3813.4.ItisinterestingtonotethatintheCompendiumofCommunityMonetaryTextsrecentlypublishedbytheMonetaryCommittee,thetextsrelatingtotheeconomicandmonetaryunionandtotheEMSareincludedinseparatechapters.5.Thoughnolegalproblemseemstobeinvolvedinthisdelineation,questionshavebeenraisedastotheappropriatecompositionoftheCounciltodecideonborderlineissues,moreparticularlytheso-calledagro-monetaryquestions.6.ManycentralbankshaveissuedtheirowndescriptionoftheEMS:seeBankofEnglandQuarterlyBulletin,vol.19,no.2,June1979,pp.190-194;MonatsberichtederDeutschenBundesbank,March1979,pp.11-18;BulletindelaBanqueNationaledeBeigique,July-August1979,pp.3-41.SeealsoI.M.F.Survey,19March1979-Supplement:TheEuropeanMonetarySystem:pp.97-100;Williamson,Lamfalussy,Thygesenetal.,TheEmergingEuro-peanMonetarySystem,editedbyR.Triffin(Brussels,1979),186pp.;CommissionoftheEuropeanCommunities,TheEuropeanMonetarySystem,CommentaryandDocuments,EuropeanEconomy,July1979,no.3,pp.63-111.7.SeeJ.-V.Louis,HetEuropeesMonetairStelsel,27SEW1979,441-458.TheEuropeanMonetarySystem9Thefollowingcommentsaredividedintotwoparts.First,thepiecesofthepuzzleareassembled:theyincludethelegalinstrumentsonwhichtheEMSisbuilt,theinstitutionalset-upwhichistomanagetheSystem,andthenatureoftheECUwhichistoplayamajorroleinvariousaspectsoftheSyste