If government policies are contingent, then they will depend on market sentiment. But market sentiment, in turn, depends on what the market believes the government will do. If costs of pegging are “low,” then pegs hold when they “should”—when the government has no desire to exit. If costs of pegging are “high,” then crises happen when they “should”—when the government clearly wants to exit. But in between these extremes, an ambiguity arises in the form of multiple equilibria because for some “medium” range of costs, a crisis occurs if and only if the market expects a crisis.