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Note the parallels: Timeline EMS Crisis


In my last blog I tried to draw your attention to the parallels between the current eurozone crisis and the EMS turmoils in 1992/93. Since the similarities become more apparent with every new day, I post the timeline of the EMS crisis once again:

Timeline EMS Crisis*

March 13 1979 Start of EMS with two fluctuations bands of + 2.25% (Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands)  and + 6% (Italy)
October 4 1981 French franc devalued 8.5% against D-mark
June 14 1982 French franc devalued 10% against D-mark
March 21 1983 French franc devalued 8% against D-mark
April 7 1986 French franc devalued 6% against D-mark
June 19 1989 Spanish peseta joins ERM (wide band + 6%)
January 8 1990 Italian lira moves to narrow band
October 8 1990 Sterling joins ERM
December 20 1991 “German interest rate raised”, “Marching to the German drum”
April 5 1992 Portuguese escudo joins ERM (wide band + 6%)
July 17 1992 “Germany lifts discount rate”, “Europeans impeded by policies ‘made in Frankfurt’”
July 18/19 1992 “World financial markets tumble”
July 21 1992 “Huge operation to save dollar”, Lira falls to record low against D-Mark”
July 22 1992 “Italian lira: the sick currency of Europe – If Rome opts for devaluation others may follow and the EMS could fall apart”
August 12 1992 “Central banks step in to prop up dollar”
September 14 1992 Lira devalued 7%
September 16 1992 Lira and Sterling leave ERM, peseta devalued 5%
September 18 1992 “Speculators find new ERM targets after lira and peseta”
September 29 1992 United interventions of the Bundesbank and the Bank of France to stop franc devaluation, “Pound  hits new low against D-Mark as franc rallies”,  “French franc pays price for partnership with D-Mark”
October 2 1992 “Bank of France spent FFr80bn supporting franc through crisis”
October 16 1992 “Danes seek opt-outs from Maastricht”
November 3 1992 “French weaponry secured win in battle for franc”
November 20 1992 “Speculators force Sweden to drop link with ERM”
November 23 1992 Spanish peseta and Portuguese escudo devalued 6%, “Irish punt, Danish krone seen as targets for selling”, “Bundesbank under new rates pressure”
November 24 1992 “EC governments raise interest rates in effort to protect ERM”
December 2 1992 “Schlesinger calls ERM an incentive to speculators – Bank of France forced to intervene to support franc in tense trading”
December 3 1992 “French franc struggles in spite of intervention”
January 5 1993 “French franc under pressure”
January 6 1993 “Germany joins France to support embattled franc”
January 9/10 1993 “Costly siege of the franc fort – The defense of the French currency is putting a severe strain on the economy”
January 21 1993 “Counting the cost of weathering ERM storm – Battle for punt leaves long list of casualties – ‘Franc fort’ squeezes jobs, growth and prices”
February 1 1993 Irish punt devalued 10%, “Dealers warn of new ERM pressures”
February 4 1993 “Speculators push Danish krone to floor in ERM – European crisis deepens as currencies weaken and slow growth threatens EMU”, “Pound hits record low in heavy trading”
February 12 1993 Hard-core currencies under pressure in the markets, “Dealers scare the D-Mark’s Belgium shadow”, “France urges faster move towards EMU”
February 25 1993 “Spain warns of tax on currency speculators”
May 14 1993 Peseta devalued 8%, escudo devalued 6.5%
May 27 1993 “Peseta in sharp fall against D-Mark”
July 10/11 1993 “Franc falls closer to ERM floor”, “Intervention fails the franc”
July 14 1993 “Franc’s ERM parity defended”
July 15 1993 “Franc Spends Bastille Day Under Siege” (International Herald Tribune)
July 24/25 1993 “Lines of defence keep falling”, “French lift rates to defend franc”, “Commission confident ERM will hold”
July 29 1993 “Bundesbank cut raises ERM hopes”
July 30 1993 “Bundesbank ½ point rate cut fails to bolster ERM”
August 2 1993 Widening of ERM bands to + 15% (exception: D-mark/Dutch guilder which retained + 2.25%)
August 7 1993 “Paris sind keine Devisenreserven geblieben” (Frankfurter Allgemeine Zeitung)
April 2/3 1994 From the FT LEX COLUMN: “There is a refreshing candour about Deutsche Bank’s admission that it does not expect much by way of earnings increase this year. Last year’s 23 per cent jump in group net profit owed much to special factors that will not easily be repeated.”
* If not noted otherwise citations refer to Financial Times headlines.

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