"A peg is only as strong as how much money you have to defend it." Which is why, in the case of the Soros story, it was the Bundesbank that broke the BoE, not

"A peg is only as strong as how much money you have to defend it." Which is why, in the case of the Soros story, it was the Bundesbank that broke the BoE, not Soros. The Bundesbank refused to issue DMs to buy up spare GBP liquidity. And that broke the peg. For a peg to work the currency issuers on both side of the fence need to act in unison, since intervention can only cap, not collar. If both play their part then the peg will be unimpeachable. Until the Federal Reserve decides to maintain stable coin pegs by buying them up in return for new dollars when the dollar strengthens against them, then the whole concept is doomed. It's not the market that decides whether a peg survives. It's the currency issuer on the strengthening side.