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A treaty among western European countries to promote economic cooperation and to establish a single European currency. In 1991, these countries met at Maastricht in the Netherlands and agreed on a timetable and rules to implement a single European currency. They conditioned membership in this currency union on the maintenance of narrow bands around parity exchange rates, and on control of inflation and government deficits. In 1992, the re-unification of Germany motivated the Bundesbank to pursue a tight monetary policy which forced other European countries to raise interest rates when their economies were mired in recession. Speculators sold the weaker European currencies, forcing a general realignment of exchange rates in August 1993. This experience dampened enthusiasm for a unified currency.
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