Central banks have moved to the forefront, far more transparently telegraphing their actions. The last decade offered plenty of lessons in how rapidly a crisis can emerge, from the collapse of 2008 to the European sovereign debt mess that is still roiling financial markets.

'Central banks today work much more quickly and collectively than in years past, to avoid knock-on effects.' 'The world is a lot smaller than it was in 1992,' says Dean Popplewell, vice president of currency analysis at foreign exchange currency Oanda.

Traders can certainly position to profit if the euro currency unravels, but Soros' bet benefited from the insular nature of the Bank of England in the early 1990s. So could a repeat of the Soros score happen today? That makes the sums Soros was betting against seem almost pedestrian by comparison. The Federal Reserve's balance sheet stands at $4.5 trillion after years of quantitative easing, while the European Central Bank laid out a plan for 1.1 trillion euro of bond purchases through September 2016. While the central banks can mobilize tens of billions of dollars, trading in foreign currency markets now runs to a trillion dollars a day.įoreign currency trading has only gotten more massive – pegged at over $5 trillion a day by the Bank for International Settlements – but so has the financial firepower of central banks. They did so by simply buying massive amounts of the weaker currency and flooding the market with the stronger currency. In former times, powerful central bankers could usually frustrate speculators. From Jaffe and Machan's story (republished in full below): One thing that is clear is the stakes have only gone up since 1992.

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