Egypt’s nationalization of the Suez Canal in 1956 and the failed attempt by France, Israel, and the United Kingdom to retake it by force constituted a serious political crisis with significant economic consequences. For the United Kingdom, it engendered a financial crisis as well. That all four of the combatants sought and obtained IMF financial assistance was highly unusual for the time and had a profound effect on the development of the IMF. This case study illustrates the complexities in isolating the current account as the basis for determining a balance of payments “need” and shows that the speculative attack on sterling–and the IMF’s response to it–were remarkably similar to financial crises in the 1990s.
