This instability manifested itself when the 1931 financial crisis, by undermining
faith in sterling convertibility, induced a large-scale shift out of London balances.
Once Britain was forced to devalue, faith in the stability of the other major reserve
currency was shaken, and speculative pressure shifted to the dollar. The National
Bank of Belgium, which had lost 25 percent of the value of its sterling reserve as
a result of Britain’s devaluation, moved to liquidate its dollar balances. The Eastern
European countries, including Poland, Czechoslovakia, and Bulgaria, then liquidated
their deposits in New York. Between the end of 1930 and the end of 1931, the
share of foreign exchange in the reserve portfolios of twenty-three European
countries fell from 35 to 19 percent, signaling the demise of the exchange portion
of the gold exchange standard.