Sterling Joins ERM, FX Activity Eyed Crunch Seen If Band Is Narrowed

REGULATIONS

Several foreign exchange dealers say that Sterling’s entry into the exchange rate mechanism (ERM) of the European Community (EC) won’t have much of an impact on turnover in the near term but volume may be squeezed later on when a decision is made to narrow the trading band.

Over the medium term, Britain is expected to narrow the trading band for Sterling to 2.25 percent to match the range of most of the other ERM currencies. "Turnover in Sterling is bound to contract, but it will take a few years

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