What Currency Crisis
Europe’s currency crisis came swiftly. For weeks the oft-derided traders had been expecting the French franc to fall against the German mark. Then came a signal: Germany’s central bank failed to cut a key interest rate, bolstering its currency. Dealers piled into the markets, selling francs and buying marks in a lemming-like frenzy. With Europe’s currency markets verging on anarchy, monetary authorities last week opted for a draconian solution: to abandon Europe’s system of closely “pegged” exchange rates (where the franc, say, would never vary more than 2....