In politics and economics, Black Wednesday refers to the events of 16 September 1992 when the British Conservative government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM) after they were unable to keep it above its agreed lower limit. George Soros, the most high profile of the currency market investors, made over US$1 billion profit by short selling sterling.
In 1997 the UK Treasury estimated the cost of Black Wednesday at £3.4 billion, with the actual cost being £3.3 billion which was revealed in 2005 under the Freedom of Information Act (FoI).
The trading losses in August and September were estimated at £800 million, but the main loss to taxpayers arose because the devaluation could have made them a profit. The papers show that if the government had maintained $24 billion foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4 billion profit on sterling's devaluation. Newspapers also revealed that the Treasury spent £27 billion of reserves in propping up the pound.
Read more about Black Wednesday: Prelude, The Currency Traders Act, Aftermath
Famous quotes containing the words black and/or wednesday:
“I thought when I was a young man that I would conquer the world with truth. I thought I would lead an army greater than Alexander ever dreamed of. Not to conquer nations, but to liberate mankind. With truth. With the golden sound of the Word. But only a few of them heard. Only a few of you understood. The rest of you put on black and sat in chapel.”
—Philip Dunne (1908–1992)
“Moneys is your suit.
What should I say to you? Should I not say,
“Hath a dog money? Is it possible
A cur can lend three thousand ducats?” Or
Shall I bend low and in a bondman’s key,
With bated breath and whispering humbleness,
Say this:
“Fair sir, you spat on me on Wednesday last,
You spurned me such a day, another time
You called me dog; and for these courtesies
I’ll lend you thus much moneys?””
—William Shakespeare (1564–1616)