POLI 243 Study Guide - Final Guide: German Federal Bank, European Exchange Rate Mechanism, Plaza Accord
2 May 2016
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1-the snake: the original 6 members of the european common market (belgium, france, west germany, Italy, the netherlands and luxembourg) decided to retain some sort of stable exchange rates, maintaining their currencies within a band of + - 2. 25%. Other states joined the european community in 1973 (denmark, britain, and ireland). The snake was an attempt to fulfill the recommendations of the werner report, but ultimately failed because it was essentially a dm zone, which led many countries to drop out. By 1976, the snake consisted only of germany and those countries being able to match its tight mon- etary policies: the netherlands, belgium, luxembourg and denmark. 2-delors committee (1989): a report that recommended monetary union in europe (as a long-term goal) rec- ommend the move to be made in 3 phases. The first phase is a period in which the last capital controls are re- moved, thus permitting the complete integration of financial market.
