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A rather forgotten yet relevant episode was the speculative attack on the Greek drachma in Spring 1994. It was triggered by the belief that the imminent liberalisation of capital flows in Greece would be accompanied by a large devaluation of the currency. However, the Bank of Greece had enough forex reserves (if I remember well, they were at the order of 10-15 billion USD) to pump into the market and also raised interest rates up to 200%. Having lost lots of money, the speculators conceded. But all that's history now.

"Eurozone leaders have turned a 50bn Greek solvency problem into a 1,000bn existential crisis for the European Union." David Miliband
by Kostis Papadimitriou on Sun Apr 10th, 2011 at 06:06:07 PM EST

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