The system of so-called Divergence Indicators in the European Monetary System puts pressure on the monetary authorities to consult before the intervention points are reached in the foreign exchange markets. Under integration aspects this arrangement marks an advance, but it also carries risks...

Critics of the EMS claim that it has failed to realise the hopes aroused at the time of its inception; a convergence of economic policies, they maintain, has not been induced by fixed exchange rates. What is the true position with regard to the convergence of economic policies?

After almost four decades of price stability, inflation has recently approached historical highs. Initially driven by global energy and food price increases, the magnitude of the surge in inflation caught central banks and markets by surprise. Price pressures are now increasingly broadening to...