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English definition of “exchange rate mechanism”

exchange rate mechanism

noun [S] ( also Exchange Rate Mechanism)
 
 
( abbreviation ERM)
GOVERNMENT, ECONOMICS the system in which a group of European countries agreed to control the value of their currencies so that exchange rates between the countries did not change beyond particular limits. This system existed before the euro started to be used as a currency: Market pressure drove the pound out of Europe's exchange rate mechanism.
(Definition of exchange rate mechanism from the Cambridge Business English Dictionary © Cambridge University Press)
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