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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 noun from the Cambridge Business English Dictionary © Cambridge University Press)
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