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It could leave the Exchange Rate Mechanism which created the conditions for the run. And it did. Fiat currency always has the backing of a government, as 'fiat'
by squidbeak 4y ago
It could leave the Exchange Rate Mechanism which created the conditions for the run. And it did. Fiat currency always has the backing of a government, as 'fiat' suggests.
- whatshisface 4y agoWhen the UK ended the ERM, they stopped backing the currency. The UK does not back the pound, the pound does whatever the market wants it to do.
- lottin 4y agoNot entirely. Central banks try to ensure price stability via monetary policy.