Yes. You let the market know that you won't be intervening. Preferably the central bank should be constitutionally barred from doing so. At that point there is

Yes. You let the market know that you won't be intervening. Preferably the central bank should be constitutionally barred from doing so. At that point there is no patsy in the market, and liquidity constraints will deal with the situation. For every seller there has to be a buyer Couple it with the occasional 100% margin calls if the price moves too much and the risk of getting caught naked becomes very high indeed.