European Monetary System (EMS)

An exchange rate system based on cooperation between European Union central banks. Monetary system found by the major European countries under which the members agree to maintain their exchange rates within a specific margin around agreed-upon, fixed central exchange rates. These central exchange rates are denominated in currency units per ECU. A currency union formed by some of the members of the EEC in 1979 that continued, with changing membership, until replaced by the EMU and the euro in 1999.