In "The Ascent of Money," Niall Ferguson discusses how a currency peg can lead to increased volatility in short-term interest rates. This occurs because a central bank works to stabilize its currency's value against a pegged asset. The effort to maintain a consistent price can create fluctuations in interest rates, affecting the overall financial landscape.

Ferguson also notes that a restricted supply of the pegged asset can cause deflation. He refers to historical examples, such as the limitations of gold supply in the late 19th century, which did not meet the rising demand. This mismatch between supply and demand can adversely influence the economy, leading to broader financial implications.