This is how Soros broke the Bank of England

Photo by Etienne Martin on Unsplash

George Soros, a billionaire investor and philanthropist, is known for making a large profit by betting against the British pound in 1992. This event is commonly referred to as “breaking the Bank of England.”

In the early 1990s, the United Kingdom was facing a number of economic challenges, including high inflation and a large trade deficit. In an effort to address these problems, the British government decided to join the European Exchange Rate Mechanism (ERM), a system that aimed to stabilize currency exchange rates within the European Union.

As a part of the ERM, the Bank of England was required to maintain a specific exchange rate between the pound and other currencies, including the German mark. However, Soros and other investors believed that the pound was overvalued and that the Bank of England would not be able to maintain the required exchange rate.

Soros and other investors began to heavily short the pound, by selling it in large amounts in the hope that the price would fall. The Bank of England spent billions of pounds trying to prop up the currency by buying it, but ultimately the pressure from Soros and other investors was too much to handle.

On September 16, 1992, the Bank of England was forced to abandon its efforts to maintain the exchange rate and allowed the pound to float…