The Exchange Rate Mechanism established a target zone for European exchange rates during the late 1980s and 1990s.

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The Exchange Rate Mechanism (ERM) was created by the European Economic Community in 1979 with the aim of reducing exchange rate volatility and promoting economic stability among its member countries. In 1992, the Maastricht Treaty formalized the ERM as part of the framework for the creation of the European Union and established a target zone for European exchange rates, within which member currencies could fluctuate against each other. This target zone was intended to promote economic convergence and prepare member countries for eventual adoption of the euro as a common currency.

The Exchange Rate Mechanism Established a Target Zone for European