A non-deliverable swap (NDS) is a type of currency swap that is paid for and settled in US dollar equivalents rather than the two currencies involved in the swap itself.
As a result, the swap is considered non-convertible (limited) as there is no physical supply of the base currencies.
NDS are commonly used when the base currencies are hard to come by, illiquid or volatile, such as developing country currencies or restricted currencies such as Cuba or North Korea.
A peg is a policy in which a national government sets a certain fixed exchange rate for its currency against a foreign currency or a basket of currencies.
The European Monetary System (EMS) was a managed exchange rate agreement created in 1979 to promote closer cooperation on monetary policy among members of the European Community (EU).
The Eurozone refers to the economic and geographical region consisting of all countries of the European Union (EU) that use the euro as their national currency.
The Exchange Rate Mechanism (ERM) is the way in which governments can influence the relative price of their national currency in foreign exchange markets.
A foreign exchange forward contract (FEC) is an agreement between two parties to make a foreign exchange transaction, usually involving a currency pair that is not available on the foreign exchange markets.