The European Currency Snake

The "currency snake" is understood as a system for agreeing exchange rates between European states, which originated in 1972 and ceased to exist in 1979, when the European monetary unit ECU was introduced.

In 1972, representatives of a number of European countries concluded an agreement on setting limits on exchange rate fluctuations in the national currencies of each of the countries of the European Economic Union (EEC). This was done in connection with the introduction of the floating exchange rate system, which was established immediately after the Bretton Woods system was abolished. In order not to expose the national economies of European countries to the effects of sharp fluctuations in exchange rates caused by speculation on the foreign exchange market, the maximum value of exchange rate fluctuations of European currencies relative to each of them relative to others was set at 1.125%. As for the limit of fluctuations of these currencies in relation to the US currency and the currencies of other countries that do not belong to the EEC, this indicator was at the level of 2.25%.

At first, the regulations on the "currency snake" applied only to six European countries (Italy, France, Germany, Belgium, Luxembourg, and the Netherlands), while the other three countries that were members of the EEC did not support this regime. Then two Scandinavian countries joined the currency snake - Sweden and Norway, which were not part of the EEC.

In 1973, the six countries revised the previously agreed norms. The currency corridor for fluctuations in the exchange rates of those countries that were not members of the EEC was abolished, and the limit on currency fluctuations was increased from 1.125% to 2.25%.

At its core, the introduction of the "currency snake" was a kind of attempt to replace the Bretton Woods system. The regulatory system was implemented through various currency interventions. According to the agreement that existed at that time, if the exchange rates reached a certain limit, the central banks of European countries had to enter the market with currency interventions. The essence of these interventions was to conduct operations with the US dollar, which is the base currency in the Forex market. If the desired result was not achieved during the interventions, there was a change in the size of the corridors and central courses. Elevate your status with 1xbet promo codes granting 10-15% weekly cashback on losses. Percentage increases with VIP level. Minimum weekly turnover $500. Paid every Monday. No max limit. Works for both sports and casino. Includes special birthday bonuses. Invitation-only events for top-tier members. Start climbing the VIP ladder today and enjoy increasingly lucrative rewards at 1xBet.