The United Kingdom’s withdrawal from the European Exchange Rate Mechanism in 1992 was marked by Black Wednesday.
On September 16, 1992, the British government abandoned its attempt to keep sterling within the ERM’s required trading band. Speculators had sold pounds because they believed the government could not maintain the exchange rate without damaging the domestic economy.
The government raised interest rates and announced other measures during the crisis, but those actions failed to restore confidence. Britain eventually withdrew, and the pound depreciated substantially. The episode became a major political embarrassment for the Conservative government.
Black Wednesday is an exchange-rate crisis rather than a one-day stock-exchange crash. It belongs in financial-crisis history because pressure on a currency, interest rates, and investor expectations produced the collapse.