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Imagine that the EMS had become a monetary union with a singlecurrency but that it...

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Economics

Imagine that the EMS had become a monetary union with a singlecurrency but that it sreated no European Central Bank to managethis currency. Instead, imagine that the task had been left to thevarious national central banks, each of which was allowed to issueas much of the European currency as it liked and to conductopen-market operations. What problem can you foresee arising fromsuch a scheme? A. A system-wide interst parity condition. B. TheEMS basic stipulation would force all central banks to conducttheir monetary policies properly so that the end result would bethe same as with European Central Bank. C. A higher inflation inthe system than would otherwise occur if central bank actions werecoordinated. D. A lower inflation in the system than wouldotherwise occur if central bank actions were coordinated.

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