What was the European exchange-rate system created in 1972 known as?

The European exchange-rate system created in 1972 was known as the snake in the tunnel.

The name described a two-part currency arrangement. European currencies were allowed to move within narrow margins against one another—the “snake”—while the group as a whole could fluctuate within wider limits against the U.S. dollar—the “tunnel.” The mechanism was created by the Basel Agreement of April 24, 1972, involving the European Economic Community’s members and countries preparing to join.

The arrangement followed the collapse of confidence in the Bretton Woods system and the Smithsonian Agreement’s exchange-rate bands. Bilateral margins between participating European currencies were limited to 1.125%, producing a maximum 2.25% movement between any two currencies. Central banks had to intervene by buying or selling currencies when rates approached those limits.

The system proved difficult to maintain. The dollar began floating freely in 1973, effectively eliminating the tunnel, while oil shocks and differing national economic policies put pressure on the snake. Several currencies left and sometimes rejoined. The European Monetary System replaced it as the next major step toward European monetary integration.