Definition, Meaning & Synonyms

exchange-rate-mechanism

noun

/ɪkˈsʧeɪndʒ reɪt mɪˈkænɪzəm/

Definition

A system that enables the currencies of different countries to fluctuate in relation to one another within a specified range.

Examples

During the 1990s, several European countries participated in the exchange-rate mechanism to maintain stable currency values.
The exchange-rate-mechanism helped to prevent excessive fluctuations that could destabilize the economy.

Meaning

The exchange rate mechanism is used to stabilize exchange rates between countries, facilitating economic trade and investment by minimizing currency risk.