Black Wednesday 1992

About Black Wednesday 1992

The day Britain crashed out of the European Exchange Rate Mechanism. George Soros bet 10 billion against the pound, earning 1 billion profit and earning the title the man who broke the Bank of England. The government raised interest rates from 10 to 15 percent in one day, then withdrew from the ERM that evening. The pound fell 15 percent. Black Wednesday destroyed the Conservative Partys reputation for economic competence. Paradoxically, the cheaper pound boosted the economy. The 1992 episode reinforced the view that governments cannot defend currency pegs against determined market opposition.