How Trump’s Pick for Treasury Secretary Once Helped Break the Bank of England

Scott Bessent, Trump’s pick to guard America’s financial system as treasury secretary, once helped orchestrate a huge trade against the British pound, which some say “broke” the Bank of England. Now, he’ll be on the other side of such trades, responsible for protecting the U.S. dollar’s stability.

Key Takeaways

• Scott Bessent has been named President Trump’s pick to lead the U.S. Department of the Treasury.
• Bessent was a partner at Soros Fund Management and the founder of Key Square Group, a hedge fund. 
• Bessent has made large, successful bets against two currencies in the past, and supporters of his nomination argue that he has a unique ability to see vulnerabilities in the market.

Bessent’s Role in Soros’ Bank of England Trades

At just 29 years old, Scott Bessent joined George Soros’ hedge fund in 1991 where he would help orchestrate one of history’s most audacious currency trades. The young analyst was dispatched to London, where he immersed himself in British housing data and discovered a crucial vulnerability: most British homeowners held floating-rate mortgages. This meant that if the Bank of England tried to defend the pound by raising interest rates, it would raise its citizens’ mortgage payments during a recession.

At the time, the British pound was kept within a specific trading range against Germany’s currency as part of a European agreement to reduce currency volatility. The Bank of England maintained this value through the active trading of pound sterling. What was unthinkable then was that private investors could amass enough financial firepower to take on one of the world’s oldest central banks.

Yet that’s exactly what Soros’ fund did, ultimately putting $10 billion into the trade against the pound. The Bank of England couldn’t withstand the onslaught—its best option, raising rates, was off the table, and Bessent had rightly predicted it wouldn’t have the money to fight off short interest—and Soros’ fund profited more than $1 billion. The U.K. government lost billions, and the long-reigning Conservative Party faced significant losses in the next election.

Bessent and the Yen

Nearly two decades after the Bank of England trades, Bessent helped orchestrate another billion-dollar currency play. After returning to Soros’ fund as chief investment officer in 2011, he arranged a meeting with an advisor to Shinzo Abe, who was poised to begin his second term as Japan’s prime minister. What he learned would lead to another historic trade.

The advisor revealed Abe’s ambitious plans to pull Japan out of its decades-long deflationary spiral—policies soon known as “Abenomics.” Bessent’s market instincts kicked in: if Abe’s plan worked, it would inevitably weaken the yen while boosting Japanese stocks.

Soros’ fund took another massive position, betting against the yen. The trade paid off, generating about $1 billion in profits in just a few months.

Bessent’s Policies as Treasury Secretary

Bessent has outlined what he calls his “3/3/3” economic agenda: cut the deficit to 3% of gross domestic product (it’s at about 6.3%), grow the economy by 3% annually (in 2024, it was at about 2.8%), and boost domestic oil production by 3 million barrels daily (it’s estimated at 21.6 million as of 2024).

Given current deficit projections, meeting these goals would require significant spending cuts or revenue increases. Though Trump’s previous tax cuts expire in 2025, Bessent supports extending them, advocating for spending cuts to offset the cost.

Perhaps most notably for a currency trading veteran, Bessent views tariffs differently than many economists. He sees them not as trade barriers but as “sanctions tools” and “one-time price adjustments,” suggesting he would recommend their gradual implementation to achieve the president’s foreign policy goals—views that seem to conflict with President Trump’s proposal for significant tariffs on goods from China, Canada, and Mexico, among others.

The Bottom Line

From helping to break the Bank of England to his multibillion-dollar bet on Abenomics, Bessent has demonstrated an ability to spot systemic weaknesses in specific financial systems. Now, he’ll be tasked with protecting rather than exploiting such vulnerabilities as he helps to manage America’s economic security.