(II-1) Exchange RateArrangements
( asof Jan. 1, 1999) |
Description of Arrangement | Anchor, etc. | Major countries | Number of | |
Peg | A domestic currency is pegged to a major currencywith infrequent adjustment of the parity. | U.S. dollar | Argentina, Malaysia, Hong Kong SAR, Bahamas,Barbados, Iraq, Lithuania, Oman, Panama, etc. | 23 |
(Euro area) | Austria, Belgium, Finland, France, Germany,Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain | 11 | ||
Euro | San Marino, Cape Verde | 2 | ||
French franc (CFA franc zone) | Cameroon, Congo, Cote d'Ivoire, etc. | 15 | ||
Deutsche mark | Bulgaria, Estonia, Bosnia and Herzegovina | 3 | ||
Others | South African rand : Lesotho, Namibia, Swaziland,Indian rupee : Nepal, Bhutan, Singapore dollar : Brunei Darussalam,Australian dollar : Kiribati | 7 | ||
Peg | A domestic currency is pegged to a weightedcurrency composite formed from the currencies of major trading or financialpartners. Currency weights in the composites are country-specific and reflectthe geographical distribution of trading and financial transactions. There arealso standardized currency baskets such as SDR and ECU. | SDR | Myanmar, Jordan, Latvia, Libyan Arab Jamahiriya | 4 |
Other currency composites | Bangladesh, Botswana, Burundi, Cyprus, Fiji(Australian dollar, Japanese yen, NZ dollar, Pound Sterling, U.S. dollar),Iceland (Euro, Canadian dollar, Japanese yen, Norwegian krone, Pound sterling,Swedish krone, Swiss franc, U.S. dollar), Kuwait, Marta (Pound sterling, U.S.dollar, ECU), Morocco, Samoa, Seychelles, Tonga, Vanuatu | 13 | ||
Flexibility Limited vis-a-vis Single Currency | The value of the currency is maintained withincertain margins of fluctuation around the de facto peg to a single currency. | SDR | Saudi Arabia, United Arab Emirates, Bahrain,Qatar | 4 |
Flexibility Limited : Cooperative Arrangements | Exchange rates are fixed against currenciesinside a specific area, while floating against those outside the area. | ERM2 | Greece, Denmark | 2 |
Managed Float | The central bank quotes and supports the exchangerate but varies it frequently. Indicators for adjusting the rate includes thebalance of payments position, international reserves. Some countries adopt themanaged float based on certain currency composite. | China, Singapore, Chile (U.S. dollar, Deutschemark, Japanese yen), Venezuela, Czech Republic, Hungary (Euro, U.S. dollar),Poland, Russia, Israel (Deutsche mark, French franc, Japanese yen, Poundsterling, U.S. dollar), etc. | 54 | |
Independent Float | Rates are market-determined, with anyintervention aimed at moderating rate of change, rather than at setting a levelfor the rate. | Thailand, Indonesia, Korea, Philippines, Brazil,Peru, India, Mexico, South Africa, Japan, United States, United Kingdom,Australia, Canada, Switzerland, Sweden, etc. | 47 |
(Note) Currencies in the parentheses of "Major countries" indicatethe composition of currency baskets.
(Sources) Documents of International Monetary Fund
(II-2) Chronology ofEuropean Monetary Union, etc
European Monetary Union | EC and Market Unification in Europe | International Monetary System, etc. | |
1944 | Jun.Conference in Bretton Woods. | ||
1952 | Jul.ECDC (European Coal and Steel Community)established. |
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1958 | Jan.EEC (European Economic Community) and EURATOM(European Atomic Community) established. | ||
1967 | Jun.EC (European Community) established, intowhich ECSC, EEC and EURATOM are integrated. | ||
1968 | End-Aug.Tariff union completed. (Internal tariffabolished. Common external tariff adopted.) | ||
1969 | Dec.Summit meeting in Hague.(Agreement oneconomic and monetary unification and the enlargement of EC) | ||
1970 | Oct."WernerReport," a first report on the economic and monetary union, published. · Reduction of margins of fluctuation in exchange rateamong menders to zero in ten years · Liberation of capital movements and unification offinancial markets | ||
1971 | Aug.Nixon Shock | ||
1972 | Apr.Basel Agreement (the creation of"snake" limiting fluctuation margins among EC menders' currencieswithin 1.125% on either side, narrower than in Smithsonian Agreement.) | ||
1973 | Mar.Transition to "joint float," inwhich members' currencies fluctuate within a certain band while floating againstU.S. dollar. | Jan.United Kingdom, Ireland and Denmark join EC. | Main countries' foreign exchange ratestransferred to floating. First oil shock |
1974 | Jun.The Committee of Twenty, IMF, adopts a finalreport, "International Monetary Reform". | ||
1978 | Dec.Resolution to create EMS adopted at EC summitmeeting. | ||
1979 | Mar. EMS inaugurated. (Germany, France, Benelux, Italy, and Denmark) · Setting parity between countries, which are obliged tointervene to maintain it. (ERM) · ECU (European currency unit: currency unit based on the basket system)introduced. | Second oil shock | |
1981 | Jan.Greece joins EC. | ||
1985 | Jun."A Genuine Common Market by 1992"published, enumerating obstacles to be eliminated to realize the integration ofinternal economies by the end of 1992. | Sep.Plaza Agreement | |
1986 | Jan.Spain and Portugal join EC. | ||
1987 | Jul."Single European Act" comes intoforce. (Completion of integration of internal markets by the end of 1992, andintroduction of limited majority rule) | Feb.Louvre Agreement | |
1989 | Apr."Delors report" published, thethird scheme for monetary union, following "Welner report" and EMS.Three-stage plan for EMU proposed . | ||
1990 | Jul.Stage One for EMU (strengthening of policycoordination) starts. | Oct.Unification of Germany. | |
1991 | Dec.Maastricht European Council reaches agreementon Treaty on European Union draft. | ||
1992 | Sep.First European currency crisis (UK and Italysecede from ERM) | Feb.Treaty on European Union, Maastricht Treaty,signed. | |
1993 | Aug.Second European currency crisis (band of ERMwidened) | Nov.Treaty on European Union comes into force. | |
1994 | Jan.Stage Two for EMU starts. | Jan.EEA (European Economic Area) established. | Dec.Mexican crisis occurs. |
1995 | Dec.The European Council in Madrid adopts EMIreport, "The Changeover to the Single Currency," deciding to name asingle currency, the euro. | Jan.Sweden, Austria and Finland join EU. | |
1996 | Nov.Italy re-enters ERM. | ||
1997 | Jun.Amsterdam European Counciladopts resolutions on the Stability and Growth Pact and on ERM II. Oct.Amsterdam Treaty signed. | Jul.Asian currency crisis occurs in Thailand. | |
1998 | Mar.The first group of countries to participatein the single currency is decided. (Belgium, Germany, Spain, France, Ireland,Italy, Luxembourg, Netherlands, Austria, Portugal and Finland - 11countries)Irrevocable conversion rates among members adopting the singlecurrency announced. | ||
1999 | Jan.Stage three for EMUstarts. Euro introduced for non-cash transactions, coexisting with each country'currency. The irrevocable conversion rate for the euro for each participating currency isdetermined. Monetary policy conducted by ECB. ERM II comes into force, and Denmark and Greece join. | ||
<Schedule> 2002 | Jan.Euro notes and coins begin to circulate. |
(II-3) Chronology ofEvents on International Monetary System
Year | Event |
Establishment of International Gold Standard System | |
1816 | Gold parity legalized in United Kingdom. (1 ounce of gold = 3pounds, 17 shillings, 10.5 pence, which had been applied de facto since 1717.) |
1844 | Amount of banknotes issued by Bank of England limited. (Peel'sBank Act)The gold standard system spreads to other countries: Germany (1873),France(1876),United States(1879),Japan and Russia(1897) |
1914 | Outbreak of World War I |
Return to International Gold Standard System (internationalgold exchange standard system) | |
1919 | United States returns to the gold standard system. |
1922 | International monetary finance conference in Genoa : liquid assets except goldpermitted to be held as reserves. |
1925 | United Kingdom returns to the gold standard system in oldparity. |
1928 | France adopts the gold standard system. Other countries also return to the gold standard system. (Japanreturns in 1930.) |
Collapse of International Gold Standard System | |
1931 | United Kingdom ceases the gold standard system. Around the sametime, the gold standard is dropped by 35 countries. (Mostcountries' exchange rates stabilized against pound sterling while floatingagainst the US dollar and French franc: areas of the former British Empire,Scandinavian countries, Portugal, and Egypt, etc.) |
1933 | United States halts conversion to gold. (in1934, gold parity devalued: 1 ounce = 35 dollars) |
1936 | Gold standard dropped by France and other gold block countries(Italy, Belgium, Netherlands, Switzerland, etc.) Competition in devaluation of exchange rate. |
1939 | World War II |
Establishment of Bretton Woods System | |
1944 | Bretton Woods Conference: IMF and World Bank Articles ofAgreement formulated. (coming into force in Dec. 1945) |
1947 | IMF begins operations: gold-dollar standard system (US dollarlinked to gold parity and adopted as key currency. Other currencies obliged tomaintain exchange parity pegged to US dollar - fluctuation band within 1%) |
Breakdown of Bretton Woods System | |
1971 | Nixon Shock (USdollar standard system, 1 US dollar =308yen) |
1973 | Yen transferred to floating exchange rate system. (Europe)EC countries introduce joint float. |
1976 | Agreement on Second Amendment of Articles of Agreement of IMF,coming into force in April 1978 (approval of floating exchange rate system). (Europe)1979EMS inaugurated. |
1985 | Plaza Agreement |
1987 | Louvre Agreement (Europe)1991Maastricht Treaty signed. 1999 Stagethree for EMU starts (introducing the euro). |