Exchange Rate Policies in the Nordic Countries

the long version

The crisis in the Exchange Rate Mechanism of the EMS in 1992 and subsequent developments threw the progress of monetary integration in Europe into confusion. Prior to the crisis there had been substantial convergence of exchange rate regimes and policy stances across Europe. Central banks from Finland to Portugal adopted in essence the same policy: pegging their exchange rate to the ERM group of countries or, more specifically, the Deutschmark. The papers in this volume were originally presented at a conference in Helsinki as the initial turmoil broke out. Now revised in many cases to reflect the events of 1992 and 1993, they contribute to our understanding of the motivations behind the drive to peg currencies in the Nordic countries to the Deutschmark, and of the problems these countries encountered in that process. An improved understanding of these motivations and problems is vital in assessing the prospects for monetary policy and exchange rate regimes for the remainder of the decade.