The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community The European Community was between 1992 and 2009 the first of the three pillars of the European Union (EU). Created by the Maastricht Treaty (1992), it was based upon the principle of supranationalism and had its origins in the European Economic Community, the predecessor of the European Union. The Treaty of Lisbon abolished the entire pillar in March 1979, as part of the European Monetary System European Monetary System was an arrangement established in 1979 under the Jenkins European Commission where most nations of the European Economic Community (EEC) linked their currencies to prevent large fluctuations relative to one another (EMS), to reduce exchange rate In finance, the exchange rates between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency. For example an exchange rate of 91 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 91 is worth the same as USD 1 variability and achieve monetary stability in Europe Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally divided from Asia to its east by the water divide of the Ural Mountains, the Ural River, the Caspian Sea, the Caucasus Mountains (or the Kuma-Manych Depression), and the Black Sea to the southeast. Europe is bordered, in preparation for Economic and Monetary Union A monetary union is an arrangement where several countries have agreed to share a single currency amongst themselves. The European Economic and Monetary Union consists of three stages coordinating economic policy, achieving economic convergence (that is, their economic cycles are broadly in step) and culminating with the adoption of the euro, the and the introduction of a single currency A currency union is where two or more states share the same currency, though without there necessarily having any further integration as would be characterised by an Economic and Monetary Union, which involves economic integration to the point of a single market, the euro The euro is the official currency of the European Union, and is currently in use in 16 of the 27 Member States. The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. The currency is also used in a, which took place on 1 January 1999. After the adoption of euro, the policy changed to linking currencies of countries outside the Eurozone to euro (having the common currency as a central point). The goal was to improve stability of those currencies, as well as to gain evaluation mechanism for potential Eurozone members. This mechanism is known as ERM2.
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In June 2004 Lithuania joined the European Exchange Rate Mechanism ii erm ii showing its commitment to adopt the euro upon EU accession Prices and transactions with foreign countries
