"The pound peg broke because the price it was pegged at was fundamentally mispriced." The pound peg broke because the other side of the peg with infinite capac

"The pound peg broke because the price it was pegged at was fundamentally mispriced." The pound peg broke because the other side of the peg with infinite capacity - the Bundesbank - refused to undertake their part of the bargain, buying pounds for new DMs. Pegs can only be stable if each issuer takes out the excess liquidity when the price moves in their direction. No currency can stabilise itself by selling foreign. It can only stabilise itself by suppressing an increase in its own value with devaluation - as we can see recently with the Rouble. In other words currencies can only cap, they can't collar.