The Origins of the ERM

The European Economic Community agreed to link their currencies together at fixed exchange rates in 1960. This made commerce between the member nations easier but it also made the national banks of these countries quite vulnerable as we'll soon see. Margaret Thatcher, the Prime Minister of the UK at the time, understood this and opposed signing up to ERM which is why Britain wasn't a part of the agreement from the start. As the British economy struggled towards the end of the 1980s Thatcher's Eurosceptics lost ground to the more pro-European members of the Conservative Party. By October 1990 Thatcher's popularity and her power within the Conservative Party had dwindled so much that Britain joined the ERM despite her opposition.