Part of the reason that triggered the 1992 EMS Crisis was that:
A) France allowed the franc to depreciate too rapidly.
B) member states built up too large a budget deficit.
C) member states had to raise their interest rates to maintain their EMS parities.
D) member states had to lower their interest rates to maintain their EMS parities.
E) Italy allowed the lira to appreciate too rapidly.

Question

Quizplus · Accepted Answer

Member states had to raise their interest rates to maintain their EMS parities, which caused economic difficulties and financial instability, ultimately leading to the 1992 EMS Crisis. The crisis highlighted the challenges of coordinating monetary policies among multiple countries using a fixed exchange rate system.

Part of the Reason That Triggered the 1992 EMS Crisis