European Monetary Agreement
[4] This allowed the countries to directly convert their currencies and integrate their balance of payments accounts, which promoted free trade.
[11] One difference that was noticed in the EMA compared with the European Payments Union was greater coordination of individual exchange rates held by each country for monthly settlements.
[5] Additionally, the EMA was a multilateral system and allowed a smaller amount of interim finance, a form of short-term borrowing, to be taken between countries in comparison to the European Payments Union.
[5][11] The loan granting as well as the multilateral settlements imposed by the EMA were not automatic or mandatory, which was a new aspect compared to prior organisations.
[11] As a continuation from the European Payments Union, the EMA similarly had a managing board which regularly monitored the developments of the member countries.
[7] This meant the feat of currency convertibility had to be slowly worked towards over the long-term, as the balance of payments in Europe was impacted by the trade deficit.
[9] It was hoped that a high level of trade liberalisation could be maintained between the member countries of the Organisation for Economic Co-operation and Development, even if they did not yet have convertible currencies.
[2] The EMA was a framework arranged to further progress the work of the European Payments Union, which was responsible for the cooperation of exchange of goods and services between countries.
It hoped to do this by achieving a fixed exchange rate system, consistent economic policy, and a union where factors of production such as capital and particularly labour were free to move around.
[2] The journey to economic integration, of which the European Monetary Agreement was a small part, was instigated due to a range of political motivations and historical views.
[14] This element of political integration was required in order for the EMA to achieve unity across the exchange rates and trade policies within Europe.
[11][12] There were concerns about the political nature of this integration, and through agreements such as the EMA, the accelerated globalisation and economic growth which could be achieved became clear.
[11] In the 1950s following the establishment of the EMA, these countries, including Denmark, the United Kingdom, Sweden, Finland and Austria chose to form their own external free trade areas.
[14] These free trade areas were not focused on political integration, rather solely on achieving the economic objectives and policies of the countries.
[10] These also impacted the European economy, in particular through promoting trade and building on the financial credit system developed by the EMA.
[12] Overtime, economic integration within Europe, including the impacts of the EMA as well as its predecessors and successors, has been referred to as a project which promised different outcomes to three specific generations.
The generation from Europe who experienced the falling of the Berlin Wall during their youth were assured they would have greater opportunities and freedom in their life.
