ND OF THE
Europe wanted to achieve MONETARY STABILITY.
or this, they needed to achieve:
EXCHANGE RATE STABILITY
The four reasons for disliking a volatile exchange ratewere:
Legacy of the 30·s
distrust of uncontrolled
ii ² Ex. Rate fluctuations
ould endanger the progressto
ards a single market.
iii ² Changes in the exchange rate
affected the CAP most
CAP dominated the budget).
A lack of care from the US
about how the fallingvalue of the $ affected the competitiveness of Europe·scurrencies
falling $, appreciating DM [Q = EP*/P]).