al Motivation, the EMS was designed to provide a "zone of monetary stability" (Solomon, 1981, p. 293). It consisted of a series of arrangements regarding exchange rates, a reserve unit, and credit facilities. Built into it was a provision for a European Currency Unit, the ECU (which happened to be the name of an old French coin), and the capability of mutual finance (Solomon, 1981, p. 294). In contrast to earlier attempts at forming a European monetary union, the EMS was structured so as to anticipate alterations in exchange rate parities among its members, thus making it a stable system with adjustable exchange rates.
One of the main purposes behind the EMS was to encourage economic integration among the members of the EEC. Originally, the goal had been to form a complete monetary union by 1980, however, the turbulence of the 1970s with the downslide of the dollar precluded this from happening. It was through the efforts of Chancellor Helmut Schmidt of Germany and President Giscard d'Estaing of France that the EMS was created. Though not necessarily capable of solving all Europe's monetary barriers, it was viewed as the nucleus for a European political alliance.
Britain, however, did not share this enthusiasm for the system, and, though joining EMS, it did not become a member of the exchange rate arrangement. Therefore, what emerged was a parity grid of exchange rates with each of the seven remaining currencies expressed in terms of the other six. Rates were also expressed in ECU. the old European unit of account which weighted each of the eight (including the pound) currencies according to three criteria: econo
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