Instead, Europe developed the euro, which solved the problem of speculative attacks and monetary credibility by replacing individual currencies with a new one. It was impossible to short the lira or the franc because there were no more lire or francs.

If the central bank of the country that printed its strong currency (Germany) had been willing to provide unlimited support to a weak currency, things would have been sorted out. Germany s Bundesbank, it was suggested, would stand ready to buy unlimited quantities of lire or francs, so no one would dare to short either currency.