The first half of the 1990s was a traumatic period for Italy. During the previous decade the country had successfully followed the discipline of the European Monetary System (EMS), inflation had reduced and exchange rate parity, after several adjustments, had been constant for more than five years. Then, in 1992, the Maastricht Treaty was signed promising the arrival of the euro by the close of the decade.
The Maastricht Treaty required further decreases in Italy’s inflation rate and a major adjustment in the country's public deficit. The latter was much higher than the treaty limit of 3% of gross domestic product (GDP), especially because of the interest bill on the public debt accumulated in the 1970s and the 1980s. The bill was high because the debt was high, and also because the interest rates on Italian treasuries contained a high premium for inflation and exchange rate uncertainty.
