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Exchange Rate Mechanism II is the exchange rate arrangement which provides the framework for exchange rate policy co-operation between the euro area and EU Member States not participating in the euro area from the start of Stage Three of Economic and Monetary Union (EMU).

Membership of the mechanism is voluntary. Nevertheless, Member States with a derogation can be expected to join the mechanism. Currently, the Danish krone participates in ERM II with a fluctuation band around the central rate against the euro of ±2.25%. Prior to the adoption of the euro by Greece on 1 January 2001, the Greek drachma participated in ERM II with a fluctuation band of ±15%.

Foreign exchange intervention and financing at the margins of the standard or narrower fluctuation bands are, in principle, automatic and unlimited, with very short-term financing available. The European Central Bank (ECB) and the participating non-euro area national central banks could, however, suspend automatic intervention if this were to conflict with their primary objective of maintaining price stability.

Source Publication:
European Central Bank Annual Report.


Statistical Theme: Financial statistics - Exchange rates

Created on Tuesday, November 13, 2001

Last updated on Tuesday, June 11, 2013