Ireland made a profound change in 1979, giving up its currency board arrangement with sterling for an independent currency within the EMS, together with financial sector reforms that gradually improved monetary control. As the EMS hardened in the late 1980s, so did Ireland’s commitment to its exchange rate target and, despite some difficulties in 1992-93, it was able to join EMU in 1999.

Years Targets and attainment Classification
1974-78 Irish pound linked one-for-one to sterling, still largely a currency board, but gradual development since 1960s of autonomous monetary policy instruments including liquidity ratios, bank lending directives, also repatriation to Dublin from London of foreign exchange reserves and developing domestic money markets augmented currency board ACB
1979-86 membership of EMS (in narrow 2.25% bands) but repeated devaluations (vs DM), in September 1979 (2%), October 1981 (5.5%),  June 1982 (4.25%), March 1983 (9%), April 1986 (3%), August 1986 (8%), and January 1987 (3%); some indirect monetary policy instruments but continued reliance on bank lending guidelines; some monetary financing of fiscal deficits loose exchange rate targeting LERT
1987-98 membership of EMS narrow bands 1987-93 with one devaluation in January 1993 (10%); considerable use of wider 15% bands from August 1993; revaluation March 1998 (3%); mainly indirect monetary policy instruments within more developed financial markets, with some further changes required before euro entry; central bank independence legislation 1998 full exchange rate targeting FERT
1999-2017 membership of European Monetary Union currency union CU

Selected IMF references: RED 1974 pp24-27; SR 1974 p12; RED 1979 pp30-31, 60; RED 1987 pp41-2; SR 1989 pp9-10; RED 1990 pp43-4; SR 1995 pp4, 7-8; SI 1997 pp17-21.

Additional sources: Honohan (1997); Houben (2000, especially pp209-11, 312-13); Kelly (2003); Honohan and Murphy (2010); Wolf et al. (2008, p11).

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