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ECB’s transmission protection instrument may lead to further crises
In the afternoon of 16 September 1992, I took a cab from Goldman Sachs’ European headquarters in London to Heathrow Airport to catch a plane to Frankfurt. When we passed Buckingham Palace, my phone rang. A journalist from the German financial daily Börsenzeitung asked me whether I expected the British authorities to succeed in defending the exchange rate of the pound in the exchange rate mechanism of the European monetary system. The pound had joined this mechanism only two years earlier and had come under heavy selling pressure against the deutsche mark. With Chancellor of the Exchequer Norman Lamont’s pledge ... (full story)