In March 1979, nine major European countries, members of the European Economic Community, launched a new experiment in international monetary cooperation—the European Monetary System. The system consists of a number of special arrangements, including a composite common currency unit similar in structure to the Special Drawing Rights of the International Monetary Fund, detailed rules for the maintenance of relatively fixed exchange rates between currencies of the member countries, and an intricate network of mutual credit facilities that will be ultimately administered by an EC supernational monetary authority. This article traces the historical development of the new system, looks at the details of the underlying arrangements, and evaluates its significance.