[2] Determined intervention and loan arrangements protected the participating currencies from greater exchange rate fluctuations.
[3] The UK did join the ERM in October 1990 under Chancellor John Major, in a move which at the time was largely supported by business and the press,[4] but was forced to leave again two years later on Black Wednesday.
[5] The chart below provides a full summary of all applying exchange-rate regimes for EU members, since the European Monetary System with its Exchange Rate Mechanism and the related new common currency ECU came into being on 13 March 1979.
Sources: EC convergence reports 1996-2014, Italian lira, Spanish peseta, Portuguese escudo, Finnish markka, Greek drachma, Sterling The eurozone was established with its first 11 member states on 1 January 1999.
[6] However, the last of the five economic convergence criteria, which need to be complied with in order to qualify for euro adoption, is the exchange rate stability criterion.
[8]) The United Kingdom entered the ERM in October 1990, but was forced to exit the programme within two years after sterling came under major pressure from currency speculators.
The UK spent over £6 billion trying to keep the currency within the narrow limits with reports at the time widely noting that the controversial Hungarian-American investor George Soros's individual profit of £1 billion equated to over £12 for each man, woman and child in Britain and dubbing Soros "the man who broke the Bank of England".
[11][12][13] Britain's membership of the ERM was also blamed for prolonging the recession at the time,[14] and Britain's exit from the ERM was seen as an economic failure which contributed significantly to the defeat of the Conservative government of John Major at the general election in May 1997, despite the strong economic recovery and significant fall in unemployment which that government had overseen after Black Wednesday.
[21] The Estonian kroon, Lithuanian litas, and Slovenian tolar were included in the ERM II on 28 June 2004; the Cypriot pound, the Latvian lats and the Maltese lira on 2 May 2005; the Slovak koruna on 28 November 2005.
[28] The former members of ERM II are the Greek drachma, Slovenian tolar, Cypriot pound, Estonian kroon, Maltese lira, Slovak koruna, Latvian lats, Lithuanian litas, and Croatian kuna.