European Monetary System

European Monetary System (EMS)

a European monetary unit, an exchange rate intervention mechanism and a transfer mechanism established in 1978 under the law of the European Communities. It is this system that established the European Currency Unit (ECU), a currency used to settle transactions between Community authorities and for operating the other mechanisms of the system. Developments in 1997 saw a second exchange rate mechanism for co-ordinating the EURO with remaining national currencies. On 1 January 2002 the euro became the legal tender of the participating countries.