When the Maastricht treaty was drafted, ten of the twelve members of the EU adhered to the Exchange Rate Mechanism (ERM I) of the European Monetary System¹. Under that regime, each member had to keep its exchange rate within a narrow band by buying its currency in the foreign exchange market to keep it from depreciating by more than 2.25% vis-a-vis the strongest currency. Furthermore, the strong-currency country had to sell its currency in the foreign exchange market or, alternatively, lend