FOR A few days it became one of the most talked-about subjects in Britain, from company chairmen down to the humblest secretary. The hot topic was not, for once, EastEnders or the Royal family, but a gathering of some middle-aged men in a foreign city last Thursday morning. Given the level of public interest, you might have thought they were plotting revolution or indulging in some weird perversion. Not exactly. They were discussing interest rates.

It was a strange and significant moment. Last week, for the first time, the British were brought face to face with the fact that a large part of their economic fortunes is determined by a group of bankers in Frankfurt. For years, German monetary policy has affected our own. But not since we joined the ERM more than 18 months ago, has there been such a graphic demonstration of what membership really entails.

Here were all the makings of a sterling crisis. If the key German interest rate - and therefore Britain's - had risen, our recession would certainly have deepened. Yet Norman Lamont, the Chancellor, could only stand on the sidelines and watch. He had no part in the game.

The stock market showed every sign of bewilderment. For two days it virtually ground to a halt while it awaited the German decision. Hours before the decision, it irrationally marked shares higher. After the decision, although it meant UK interest rates would not have to rise after all, share prices fell.

All this is no reason to pull out of the currency mechanism. The Bundesbank was only doing what it is supposed to do. But it will take a little getting used to. Welcome to the ERM.