Black Wednesday

Black Wednesday, also called the 1992 sterling crisis, occurred on 16 September 1992 when the British government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism after failing to keep the currency above its agreed lower limit despite raising interest rates and spending billions of pounds in reserves to defend it. The billionaire currency trader George Soros built a massive short position against sterling and profited by more than a billion pounds from the devaluation, an episode that made him famous as the man who broke the Bank of England. The Treasury's own later estimates put the cost of the failed defense at roughly 3.3 billion pounds. Though it was widely seen at the time as a national humiliation that damaged the Conservative government's reputation for economic competence, the forced exit from the ERM let Britain cut interest rates and adopt inflation targeting, and the subsequent depreciation of sterling is credited by many economists with helping fuel a period of sustained economic growth through the 1990s.