Economists have referred to the onset of World War I as the end of an age of innocence for foreign exchange markets, as it was the first geopolitical conflict to have a destabilizing and paralyzing impact. The United Kingdom declared war on Germany on August 4, 1914 following Germany's invasion of France and Belgium. In the weeks prior, the foreign exchange market in London was the first to exhibit distress. European tensions and increasing political uncertainty motivated investors to chase liquidity, prompting commercial banks to borrow heavily from London's discount market. As the money market tightened, discount lenders began rediscounting their reserves at the Bank of England rather than discounting new pounds sterling. The Bank of England was forced to raise discount rates daily for three days from 3% on July 30 to 10% by August 1. As foreign investors resorted to buying pounds for remittance to London just to pay off their newly maturing securities, the sudden demand for pounds led the pound to appreciate beyond its gold value against most major currencies, yet sharply depreciate against the French franc after French banks began liquidating their London accounts. Remittance to London became increasingly difficult and culminated in a record exchange rate of US$6.50/GBP. Emergency measures were introduced in the form of moratoria and extended bank holidays, but to no effect as financial contracts became informally unable to be negotiated and export embargoes thwarted gold shipments. A week later, the Bank of England began to address the deadlock in the foreign exchange markets by establishing a new channel for transatlantic payments whereby participants could make remittance payments to the U.K. by depositing gold designated for a Bank of England account with Canada's Minister of Finance, and in exchange receive pounds sterling at an exchange rate of $4.90. Approximately US$104 million in remittances flowed through this channel in the next two months. However, pound sterling liquidity ultimately did not improve due to inadequate relief for merchant banks receiving sterling bills. As the pound sterling was the world's reserve currency and leading vehicle currency, market illiquidity and merchant banks' hesitance to accept sterling bills left currency markets paralyzed.