Chapter 538 Systemic Risk
"Hey, elbow! Are you in the capital of Shu? When are you coming?" Cousin An An's carefree voice rang through the phone.
“Let’s get down to business first, cousin An An, we in Jin’an have business dealings with Hong Kong and Macao, right?”
“Yes, we cooperate very well with the agents there. "Happy, what's wrong?"
"Do you have anyone you trust? Also, according to the dividends, how much foreign exchange can I allocate without affecting the company's operation?"
"There are people. As for the number, I have to ask over there. The firm over there faxes us financial reports once a month." Cousin An An seemed to have turned on the speakerphone, and her voice changed slightly: "What do you want to do? Well?”
“I want to use my own foreign exchange to make a market move,” Zhou Zhi said, “I have it in my own hands. I have 1.5 million Hong Kong dollars. I don’t know what’s going on in the company.” !”
“Cousin An Xin, please be careful what you say, I’m also on speakerphone here,” Zhou Zhi reminded.
“Ahem.” Cousin An An’s voice suddenly became so gentle, Zhou Zhi felt that the hairs on the back of her hands stood up: “Little elbow, tell me, what is this? What to do?”
"The situation is like this." Zhou Zhi said: "The current exchange rate of the pound against the U.S. dollar has reached a historical high. If it breaks through the exchange rate of one pound to two U.S. dollars, there may be a sharp decline in the market."
"Tch! I thought it was another big rise in the market. What's the use of a big drop?" Xu Anxin disagreed.
“There are many financial products on Hong Kong Island, including a type of index fund that can be sold first and then bought.”
“What do you mean?”
“That’s it. If you predict that the market price of a product will fall, you can first borrow the product from an institution and sell it. When the product drops to the price you predicted, you can then buy it and return it to the institution, which is the end of a round of trading. ”
"This means...that is..."
"It means that if something is worth ten yuan now, I will borrow it from the institution and sell it. When the thing drops to seven yuan, I will buy it back and return it to the institution. This is equivalent to me making three yuan.”
“Of course, there will be some handling fees to the agency, which is impossible. All three are yours.”
“Can this be done? Are institutions that stupid?”
“This is a way for large institutions to spread financial risks.” Financial institutions in Hong Kong and the West have many such products, and they are very smart.”
"Cousin, think about it, in this world there will always be people who are buying up, and there will always be people who are buying down. If the ups and downs are balanced, then the institution is working in vain. It neither loses nor makes a profit, but there are also handling fees, right?"
“Institutions are not gods. They will only choose to hold positions in products with a high probability of profit. With their approach, if the pound continues to rise, it will naturally be me who loses. If the pound falls, although I make a profit, they keep it. product The size of the share, and they also have hedging projects, will not be all their losses in the end. In fact, it is another group of people like me who will share the losses for them.”
“Elbow, how did you know that the pound was going to fall? "
"That's it..."
"Don't tell me, this is your phone number, right? Someone will call you soon. If you can convince him, I will support you. ! ”
"Who is so awesome? You don't believe me, but you believe him?"
"Don't underestimate people, they are professionals. Our accounting firm on Hong Kong Island supervises our agency business, etc. "Hello!"
"Hello, hello, sister..." Before she could finish her words, the phone was hung up.
"Elbow, do you still need help from my cousin?" Fu Xia asked.
“Of course, the more information channels, the better.” Zhou Zhi said: “What I need now is the exchange rate changes of the currencies of the EMS member countries against the US dollar, starting from May until now.”
"EMS?"
"The European Monetary System, in addition to the ECU against the US dollar." "ECU?"
"The European Monetary Unit!"
“Oh.”
Just as Fu Xia dialed the number, Zhou Zhi's mind was already reviewing the upcoming bloody storm.
After World War II, the United States established the Bretonson System with the power of victory and three-quarters of the world's gold reserves.
The core of the Bretonson System is that the currencies of all countries in the world are linked to the US dollar, and only the US dollar is linked to gold, the currency issued by God.
For the United States, the benefits are of course self-evident. The United States has used financial instruments to draw blood from countries around the world.
However, there is a great saying - where there is oppression, there is resistance.
In the early 1970s, island countries and Western Europe rose strongly, but the United States was caught in the quagmire of the Vietnam War, resulting in a relative weakening of its economic strength and its inability to shoulder the responsibility of stabilizing the U.S. dollar exchange rate.
The consequence is naturally the rise of trade protectionism. After the United States shamelessly announced the devaluation of the dollar twice, countries that could not bear it began to refuse to be fools and abandoned the fixed exchange rate between their own currencies and the U.S. dollar and adopted a floating exchange rate system.
At that time, many places in European countries even refused to accept the U.S. dollar. The international monetary system centered on the U.S. dollar began to collapse, and the status of the U.S. dollar declined.
This is the collapse of the Bretonson system.
So Japan and Germany, as ambitious countries, decided to shoulder the burden of world currency settlement and established a world gold fund, the SPDR, to perform this task.
However, it was blocked by the United States, because the United States found a shortcut-controlling energy and establishing a petroleum-meter dollar system.
As we all know, the SPDR lost the competition with the petrodollar.
The countries of Western Europe are regrouping. Since we can’t do the big work, can we sign up for a group first? Ever since, the predecessor of the euro, the European Monetary System EMS, was born.
The essence of EMS can be summarized in one sentence. Small sampans are connected with iron ropes to enhance their ability to withstand wind and waves.
Specifically, the currencies of major European countries are linked to a quasi-settlement instrument just like they were previously linked to the rice dollar.
This tool is called ECU, which stands for European Currency Unit.
Another currency basket. Participating countries include France, Germany, Italy, Belgium, Denmark, Ireland, Luxembourg, the Netherlands, Spain, and the United Kingdom, a total of ten countries.
In "The Romance of the Three Kingdoms", Pang Tong once said this when he met Cao Cao: "If the big and small boats are all matched, maybe thirty in a row, or fifty in a row, with iron rings at the beginning and the end. Chain, wide plank on top, rest People can cross it, and horses can walk on it. If you ride on it and let the waves rise and fall, why should you be afraid?” The ability to withstand wind and waves is not enough, right? If that's not enough, then we have a total of ten countries, and they are all connected in series through this ECU. Due to the existence of ECU, a floating linked exchange rate system is formed between any two ships. At the same time, it is stipulated that the exchange rate between the currencies of each two participating countries can only fluctuate within a narrow range above and below the fixed exchange rate. When the exchange rate between the two currencies exceeds this range, the central banks of the two countries must intervene in the foreign exchange market to Prices fell back into the volatile range.
In this way, it is equivalent to ten countries jointly participating in the process of maintaining currency exchange rate balance. The combined currency size of the ten countries can always win. Oh no, I don’t dare to think about winning. You can always guarantee that you won’t lose again.
However, Western European countries may not have read "The Romance of the Three Kingdoms" and do not know the tragic ending of Cao Jun in the story of Burning Red Cliff; nor have they read the story of "A blessing in disguise and a disaster".
The crisis comes from the imbalance in the development of the ten countries. This imbalance is then reflected in the inevitable inconsistency in the pace of interest rate adjustments in the currencies of various countries.
After returning to the original nature, the principles of the world are very simple. Returns and risks are always proportional.
After the iron cable is connected to the ship, the stability will naturally increase greatly, but once the risk is reflected, it will be a systemic risk.
In other words, once a certain ship catches fire, it may drag the entire fleet into the abyss.
(End of this chapter)