ERM

ERM　—　Institutions

European Exchange Rate Mechanism. A system to keep currencies around a central rate before their entry into the Euro.

European Exchange Rate Mechanism. A system to keep participating currencies within a band around a central rate, which served as a pathway for currencies before joining the Euro. The United Kingdom joined in 1990 at a rate of £1 = 2.95 DM and left two years later.

⚠ On September 16, 1992, the pound could not be defended against speculative selling even with two interest rate hikes and was forced to withdraw (Black Wednesday).