Black wednesday

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In Britain, Black Wednesday refers to September 16, 1992, which is known as the day that a combination of monetary policy makers and speculators “broke the pound”. They didn't actually break it, but they forced the British government to pull it from the European Exchange Rate Mechanism (ERM), successfully removing itself from the collective “Eurozone” economy.

The Mechanism
The European Exchange Rate Mechanism was an act that was created by several European nations in hopes to unify the economies within the Eurozone. ERM was first introduced by the European Community which was created by the Treaty of Rome in 1957.The European nations that first introduced the ERM were Belgium, Denmark, France, West Germany, Greece, Ireland, Italy, Luxemburg Netherlands, Portugal, and Spain. All member countries of the Community (at the time) joined the European Monetary System (EMS); in 1999 all the members of the EMS had adopted the European Currency Unit (ECU), which is considered the precursor to the Euro today. The goal of ERM was to reduce exchange rate fluctuation and achieve monetary stability in Europe ("European Central Bank").
The ERM was a “semi-pegged system” because it uses fixed currency exchange rate margins meaning, exchange rates could vary but had to stay within a set of fluctuation boundaries of the ECU.
The European Currency Unit was a essentially a weighted average of all of the currencies of the European Community member countries, before being replaced by the Euro, this was Europe’s closest unit of account to a centralized currency. As we had stated above the European Exchange Rate Mechanism attempted to minimize fluctuations between member state currencies by way of keeping each currency within a range around the ECU....

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...ere presumably indicating to the member nation that its economic policies were not meeting the requirements towards the Community average, thus they needed to change something in their economic policies (Kaletsky).
Again, by design the ECU as a weighted average of member currencies, the community average (ECU) was designed in terms of the average fiscal and monetary of all of the countries of the ESM. In practice, this was very difficult because of the trends towards all of the countries policies to become more and more like the strongest countries in the Eurozone in the case in the 80’s and early 90’s becoming close to the West German economy was what mattered the most and the exchange rate of a specific currency in relation to its joint central rate against the Deutsche Mark, not the member countries exchange rates deviating from its ECU central rate (Kaletsky).

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