For people and firms, it was a pain to have to change currencies to travel or trade, and having to do so reduced both. At the state level the argument was that all the different exchange rates moving together generated currency volatility that was hard to hedge against, and it created incentives for weaker currencies to seek respite by devaluing against their stronger trading partners to improve their own competitiveness, which many European states did, repeatedly. The problem with devaluation as an adjustment policy is not only that it beggars thy neighbor; it also leads to import inflation in the countries that devalue. Italy became the poster child for these problems, having devalued the lira every year between 1980 and 1987, save 1984, thereby suffering much higher-than-average inflation than the rest of Europe while effectively reducing the average Italian's real wage through the inflationary back door.

Mark Blyth, Austerity, loc. 210