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Legal Terms - Exchange Rate Mechanism (ERM)
A facet of the European Monetary System wherein the central banks of member nations were prohibited from permitting their currencies to deviate above a specified percentage above (ceiling rate) or below (minimum rate) a central rate, established in ECUs. The system functioned as a forerunner to the complete European Monetary Union (EMU), realized between 1999 and 2002. Since 1999, governments may participate in ERM II, which is anchored in the euro and overseen by the European Central Bank. All nations entering the EU must henceforth participate in ERM II as soon as it is deemed economically feasible.
A facet of the European Monetary System wherein the central banks of member nations were prohibited from permitting their currencies to deviate above a specified percentage above (ceiling rate) or below (minimum rate) a central rate, established in ECUs. The system functioned as a forerunner to the complete European Monetary Union (EMU), realized between 1999 and 2002. Since 1999, governments may participate in ERM II, which is anchored in the euro and overseen by the European Central Bank. All nations entering the EU must henceforth participate in ERM II as soon as it is deemed economically feasible.
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