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Exchange Rate Mechanism

Line breaks: Ex|change Rate Mech|an¦ism
(abbreviation: ERM)

Definition of Exchange Rate Mechanism in English:

An arrangement within the European Monetary System that allows the value of participating currencies to fluctuate to a defined degree in relation to each other so as to control exchange rates. Each currency is given a rate of exchange with the euro, from which it is allowed to fluctuate by no more than a specified amount; if it moves beyond this the government in question must alter its economic policies or reset the currency’s rate with the euro.

Definition of Exchange Rate Mechanism in:

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