The Exchange Rate Mechanism (ERM) is a framework used by countries to manage
their currency exchange rates within a specified range. It is a part of the broader economic and monetary union often adopted by countries seeking stability in their currency values. The ERM helps
prevent abrupt and volatile fluctuations in exchange rates, promoting economic stability and fostering international trade. Central banks play a crucial role in maintaining the agreed-upon exchange
rate bands by intervening in the foreign exchange market when necessary. While the ERM has been successful in promoting stability, it is not without challenges, as demonstrated by the turbulence faced
by some European countries in the early 1990s.