9.4　The birth of a European currency: the euro

The original 15 members of the European Union (EU)are also members of the European Monetary System (EMS).This group has tried to form an island of fixed exchange rates among themselves in a sea of major floating currencies.Members of the EMS rely heavily on trade with each other, so they perceive that the day-to-day benefits of fixed exchange rates between them are great.Nevertheless, the EMS has undergone a number of major changes since its inception in 1979, including major crises and reorganizations in 1992 and 1993, and conversion of 11members to the euro on January 1, 1999 (Greece joined in 2001).