The pound was attacked at 1992 because the European exchange rate mechanism was in trouble at that time. The European exchange rate mechanism from 1979 is the first stage of the plan to establish a single European currency (euro). This mechanism requires the exchange rates of participating European countries to fluctuate within a specific range. Because of Germany's locomotive position in the European economy, the core exchange rate is based on the German mark. Once the exchange rate fluctuation exceeds this range, the central banks of member countries have the obligation to intervene. 1After the signing of the Maastricht Treaty in February, 1992, the EU 12 member states put forward a specific timetable for establishing the euro, and the European Central Bank and the single currency will be established before the year 2000. However, contrary to expectations, Germany has to maintain high interest rates to attract investment because of the huge unified expenditure, which has brought great depreciation pressure to other European currencies. In contrast, the pound and the lira are in a weak position. If we want to maintain the exchange rate, we must raise interest rates, but high interest rates will hit the already weak domestic economy. 1In July, 1992, six British monetary experts jointly wrote to The Times of London, asking the British government to reduce interest rates to overcome the economic depression and even consider withdrawing from the European exchange rate mechanism. For the British government, interest rates can be lowered, but only if Germany also lowers interest rates, otherwise it will mean the breakdown of the exchange rate link between the pound and the mark. Soros saw this opportunity. He believes that the attitude of the powerful Bundesbank will play a decisive role. The Bundesbank will protect the franc and give up the pound. The facts confirmed Soros's judgment. The German Federal Bank rejected many requests from the British government and resolutely opposed to lowering its interest rate. Soros and others have long been aware of the problems existing in the European exchange rate mechanism. They carefully laid out and began to short Italian lira and pound in large quantities. 1September 8, 992, the Finnish mark announced its decoupling from the German mark for the first time. On September 12, the day after Germany announced that it would keep interest rates unchanged, the lira fell below the bottom line of the fluctuation against the mark. In Britain, Prime Minister Major and Governor of the Bank of England Raymond have repeatedly declared that the pound will never leave the European exchange rate stability mechanism. In order to prevent the exchange rate of the pound from falling, the government asked the Bank of England to buy the pound and keep the exchange rate of the pound at the level of 1: 2.778 mark. However, Soros's intention to attack the pound is very firm. He shorted 7 billion pounds, bought 6 billion German marks and bought 500 million British stocks. He also borrowed 5 billion pounds and exchanged it for a strong mark at an exchange rate of 2.97. The Bank of England took out $26.9 billion from its foreign exchange reserves of $78.8 billion to buy pounds, but it still could not stop the downward trend of pounds. 16 In September, the British government raised interest rates twice in a row that day, bringing the interest rate to 15%, but it still didn't help. In the afternoon, with a great sense of humiliation, British Prime Minister Major and Governor of the Bank of England Raymond were forced to announce their withdrawal from the European currency exchange rate system, and eventually the pound depreciated 15%. On September 17, Italy also announced its withdrawal from the European currency exchange rate system, and the lira floated freely. Soros won $654.38+0 billion in the pound war, and with speculation in Lira and other places, he earned $2 billion in this war. From 65438 to 0992, Soros's personal income was $650 million, which made him the richest man on Wall Street that year. At the same time, he also won the title of "Bankrupt of the Bank of England" and "the most successful investor in the world". In the eyes of British public, Soros became a hero. They said in the traditional British way,' Bless him, if he gets $654.38 billion from our stupid government, he will become a billionaire'. "