Spectator on facebook

Spectator on facebook

What is the ERM II?

The European Exchange Rate Mechanism (ERM) II is the EU's system of exchange rates. Countries have to stay in the ERM II for at least two years before adopting the euro.

The European Exchange Rate Mechanism (ERM) II is the EU's system of exchange rates. Countries have to stay in the ERM II for at least two years before adopting the euro.

Within this system, national currencies are given a central parity - a fixed median exchange rate against the euro. Currencies can move 15 percent higher or lower than their parity rate.

The agreement on ERM II membership does not include a clause about countries that are expelled or choose to leave the system. Slovakia would leave the ERM II if the crown exceeds its limits, but before that happens it could negotiate another change of its central parity. This would not be considered a violation of ERM II conditions.

When a parity rate changes, it is usually due to revaluation or a currency's increasing value. Devaluation, or decreasing the value, is less likely.

If the crown gets close to its ERM II limits, the European Central Bank and the central banks of the eurozone can help the National Bank of Slovakia to keep the crown within its limits through interventions. They would do this on the condition that the government is following a responsible budgetary policy that does not increase the state deficit and complies with the ERM II programme.

Besides Slovakia, other states included in ERM II are Estonia, Latvia, Lithuania, Cyprus, Malta, and Denmark.

The processing of personal data is subject to our Privacy Policy and the Cookie Policy. Before submitting your e-mail address, please make sure to acquaint yourself with these documents.

Top stories

Institutions can be quickly destroyed, but they are hard to build

Head of the To Dá Rozum intiative, Renáta Hall, talks about the impacts of a dispute between the academy of sciences and the Education Ministry.

Renáta Hall

Spectacular Slovakia #3: Unexpected hiking (Enjoy Bratislava's greenery) Audio

In Slovakia, you can hike in the capital city. Listen to the latest episode of our travel podcast to find out more.

The Financial Administration’s head resigns from post

František Imrecze says his decision was spontaneous.

František Imrecze

People will gather to support imprisoned Ukrainian filmmaker

The open letter in support of Sentsov has been signed by more than 2,800 people.

People hold posters to support Ukrainian filmmaker Oleg Sentsov, who is currently on hunger strike in a Russian jail to demand the release of the other Ukrainian hostages taken by the Kremlin, in front of the Embassy of the Russian Federation in Kiev on August 21, 2018.