unit of account within the European Payments Union, practically the U.S. dollar. – As far as mainly agricultural prices were fixed in ERE, goods prices were profoundly affected by parity changes of the member countries. This is because in the case of a devaluation, these prices rise in the devaluing country in national currency by the devaluation rate. In the case of an appreciation, these prices in the appreciating country fall in national currency by the appreciation rate. – In August 1969, for example, the FRF depreciated by 12.5 percent, and in October the DEM appreciated by 8.5 percent. While the French were now able to use more FRF for one ERE in conversions, the expenditure in DEM for one ERE decreased from DEM 4.00 to DEM 3.66. Thus, the revaluation of the DEM in the Federal Republic of Germany led to a reduction in all prices, refunds, and premiums expressed in ERE, while there were corresponding increases in France. Such distortions of competition in the agricultural sector gave rise to strong pressure to promote the introduction of a common European currency. – See European Monetary Union.
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