The crisis was the result of immense pressure. The UK had joined the European Exchange Rate Mechanism (ERM) in 1990 to stabilize its economy, but by 1992, high inflation and recession made it difficult to keep the pound within the agreed-upon bands, especially against the strong German Deutsche Mark. The government and the Bank of England spent billions from foreign reserves buying pounds to prop up its value. Major financial speculators, convinced the pound was overvalued, placed massive bets t