In order to lower interest rates and invigorate the recently sluggish economies of North America, Western Europe and Japan, there has been pressure for looser monetary policy. In the United States, the discount rate dropped significantly from 7 per cent in the fourth quarter of 1990 to 3.0 per cent before being raised again during 1994. In the European Union (EU), the pressure of rising unemployment and stagnating economic growth was instrumental in the turmoil in the European exchange rate markets in 1992 and 1993. Italy and the United Kingdom withdrew from the EU’s Exchange Rate Mechanism (ERM) in September 1992. Other slowing economies such as France also eventually proved unwilling and/ or unable to match the tight monetary policies pursued by the German Bundesbank and consequently disengaged from the formerly rigid ERM exchange rate bands in August 1993.