Editing European Monetary System (section)

===1992 crisis===
{{Further|Black Wednesday}}
The year 1990 saw a crisis in the EMS. The [[European single market]] had been created in 1986 with the main goal of removing control on capital movements. Periodic adjustments raised the value of strong currencies and lowered those of weaker ones, and national interest rates were changed to keep the currencies within a narrow range. In early 1990, the European Monetary System was strained by the differing economic policies and conditions of its members, especially the newly reunified Germany, and Britain, which had initially declined to join, subsequently joining in 1990. The opt-out of Denmark from the EMU in 1992 and exchange rate adjustments of the currencies from weaker countries by the EMS also contributed to the crisis.<ref name="Preda-2017" />{{page needed|date=May 2025}}

Speculative attacks on the French franc during the following year led to the Brussels compromise in August 1993 which broadened the fluctuation band from +/-2.25% to +/-15% for all the participating currencies.<ref name="Höpner-2017" /> The German central bank reduced interest rates and the UK and Italy were affected by large capital outflows. In the aftermath of the crisis, Italy and the UK both withdrew from the ERM in September 1992.<ref name="Preda-2017" />{{page needed|date=May 2025}}

According to [[Barry Eichengreen]], there were three primary reasons for the crisis:  Italy, Spain and the UK had not brought their inflation rates down to the levels of other EMS members, which contributed to competitive imbalances; rising unemployment (stemming in part from German unification) reduced the credibility of the governments with high unemployment rates and weak public support, which led markets to attack the currencies of those countries; and that  The Maastricht Treaty provided the conditions for self-fulfilling speculative attacks.<ref>{{Cite book|last=Eichengreen|first=Barry|url=https://www.jstor.org/stable/j.ctvd58rxg|title=Globalizing Capital: A History of the International Monetary System|date=2019|publisher=Princeton University Press|isbn=978-0-691-19390-8|edition=3rd|pages=163–169|doi=10.2307/j.ctvd58rxg|jstor=j.ctvd58rxg|s2cid=240840930}}</ref>