At one EC Council meeting in the mid-1980s, even Margaret Thatcher, caught o_ guard, was provoked into saying that she could not 100% exclude that the uk might never ever think of discussing the option
of joining a common European currency. Belgium's then finance minister, Mr Maystadt, concluded that
the advent of the common currency was a matter of a few years and that it would be introduced at the official parities, without any interim realignments. From these views which, it later turned out, were both wrong it followed that the huge interest differential between Lira and Marks had become virtually an arbitrage opportunity. Thus, speculation was justified: one should borrow in a low-interest currency, like dem, and invest the proceeds in a high-interest one, like itl (the \carry trade"). Still, the country's rule-books stated that the Finance Ministry could borrow only to finance the state's budget deficit. The minister therefore signed a huge long-term swap contract instead, arguing that since the law did not mention swaps, their use was unrestricted.
The whole deal blew up in his face when the erm collapsed in 1992 and the itl lost one third of its value.