Riding the wind of rebirth

Chapter 537 Systemic Risk

"Hey elbow! Have you arrived in Shudu? When are you coming?" Cousin An Xin's carefree voice rang through the microphone.

"Let's get down to business first, Cousin An Xin, we, Jin'an, have business dealings with Hong Kong and Macau, right?"

"Yes, we had a great time working with the agent over there, what's the matter?"

"Is there anyone you trust? Also, according to the dividend commission, how much foreign exchange can I deploy without affecting the operation of the company?"

"There are people there. As for the number, I have to ask over there. The office over there will fax us financial reports once a month." Cousin An Xin seemed to be on the speakerphone, and her voice changed a little: "What are you going to do?" Well?"

"I want to use my own foreign exchange to make a wave of the market." Zhou Zhi said, "I have 150 million Hong Kong dollars in my hand. I don't know what's going on with the company?"

"I'm going to fuck you!" Cousin An Xin's voice suddenly became louder: "You robbed a bank?!"

"Cousin An Xin, please be careful when you speak, I also have the speakerphone on here." Zhou Zhi reminded.

"Cough cough." Cousin An Xin's voice suddenly became very gentle, and Zhou Zhi felt the hairs on the back of her hands stand on end: "Little Elbow, tell me, what exactly is this going to do?"

"The situation is like this." Zhou Zhi said: "The current exchange rate of the pound to the dollar has reached a historical high. If the exchange rate of one pound to two dollars breaks through, there may be a wave of sharp falls in the market."

"Cut! I thought there was another big rise in the market. What's the use of a big drop?" Xu Anxin didn't think so.

"There are many financial products on Hong Kong Island. Among them is a type of index fund, which can be sold first and then bought."

"What do you mean?"

"That is, if you predict that the market price of a product will fall, you can first borrow this product from the institution and sell it, and wait until the product drops to the price you predict, and then buy it back to the institution, even if it is the end of a round trade."

"That means...that's..."

"It's an item that is worth ten yuan now. I borrow it from the institution and sell it. When the item drops to seven yuan, I buy it back and return it to the institution. This is equivalent to earning three yuan."

"Of course, some handling fees have to be paid to the agency. It's impossible to just keep all three yuan for yourself."

"Can it still be like this? Is the organization that stupid?"

"This is a measure for large institutions to diversify financial risks." Zhou Zhi said, "Financial institutions in Hong Kong Island and the West have many such products, and they are very smart."

"Cousin, think about it. In this world, there will always be people buying up, and there will always be people buying down. If the ups and downs are balanced, then the institution is equivalent to a waste of work. It does not lose or make money, but there are also handling fees, right?"

"Institutions are not gods, they only choose to hold positions in products with a high probability of profit. If the pound continues to rise, it will be me who loses. If the pound falls, I will make a profit, but they will retain the share of the product. scale, and they also have hedging projects, the final loss will not be all of them, in fact, another group of people like me will share it for them.”

"Elbow, how did you know the pound was going to fall?"

"Is such that……"

"Don't tell me, that's all you need to call, right? Someone will call you later, if you can convince him, my sister will support you!"

"Who is so awesome? You don't even believe me, you believe him?"

"Don't underestimate people. They are professionals. Our accounting firm in Hong Kong Island supervises our agency business. Wait!"

"Hey, hello, sister..." Before she finished speaking, the phone was hung up.

"Elbow, do you still need my cousin's help?" Fu Xia asked.

"Of course, the more information channels, the better." Zhou Zhi said, "What I need now is the data on the exchange rate changes of the EMS member countries' currencies against the US dollar from May until now."

"EMS?"

"European Monetary System, in addition to the movement of the ECU against the dollar."

"ECU?"

"European Currency Unit!"

"Oh."

Just when Fu Xia dialed the number, Zhou Zhi had already replayed the upcoming bloody storm in his mind.

After World War II, the United States established the prestige of victory and three-quarters of the world's gold reserves, and established the Brettonson system.

The core of the Brettonson 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 the currency issued by God-gold.

For the United States, its benefits are of course self-evident. The United States has completed the blood draw of countries all over the world through financial tools.

Yet there is a great saying - where there is oppression, there is resistance.

In the early 70s, the island countries and Western Europe rose strongly, but the United States was caught in the quagmire of the Vietnam War, which led to a relatively weakened economic strength and was unable to undertake the responsibility of stabilizing the exchange rate of the US dollar.

The consequence of this is naturally the rise of trade protectionism. After the United States brazenly announced the devaluation of the dollar twice, the unbearable countries began to refuse to be fools, and one after another abandoned the fixed exchange rate between their currencies and the US dollar and adopted a floating exchange rate system.

At that time, many places in European countries even refused to accept the US dollar for a time. The US dollar-centered international monetary system began to collapse, and the status of the US dollar declined.

This is the breakdown of the Brettonson system.

Therefore, Japan and Germany, as ambitious countries, decided to take up the burden of world currency settlement, and established a world gold fund, namely SPDR, to carry out this task.

However, it was put on the table by the United States, because the United States has found a shortcut-to control energy and establish a petroleum-dollar system.

As a result, we all know that SPDR lost in the competition with the petrodollar.

Western European countries have regrouped. Since we can't play the big game, shall we report for a group first?Thus, the predecessor of the euro, the European Monetary System EMS was born.

The essence of EMS can be summed up in one sentence. The small sampans are connected with iron cables to enhance the ability to resist wind and waves.

Specifically, the currencies of major European countries are linked to a quasi-settlement tool just like they were linked to the dollar before.

This tool is called ECU, which stands for European Currency Unit.

Another currency basket.The 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 large and small boats are matched together, or thirty in a row, or fifty in a row, the head and tail are linked with iron rings, and the top is covered with broad boards. Don't say that people can cross, and horses can also walk, ride on this, let him go up and down in the wind, waves and tides, so why not be afraid?"

This is the way Western European countries have come up with. The currency of our country is not strong enough to withstand wind and waves, right?If it is not enough, we have a total of ten countries, all of which are connected in series through this ECU.Due to the existence of ECU, any two ships have formed a relationship with a floating linked exchange rate system.At the same time, it is stipulated that the exchange rate between the currencies of every 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 and convert The price fell back into the range of volatility.

In this way, it is equivalent to ten countries participating in the process of maintaining the balance of the currency exchange rate. The currency volume of the ten countries is added up, and they can always win. lose.

However, Western European countries may not have read "The Romance of the Three Kingdoms", and they do not know the tragic ending of Cao Jun in the story of burning Chibi;

The crisis comes from the unbalanced development of the ten countries, which is then reflected in the doomed inconsistency in the pace of interest rate adjustments of the currencies of various countries.

After returning to the basics, the principles of the world are very simple, and the benefits and risks are always proportional.

After connecting the ship with iron cables, the stability will naturally increase greatly, but once the risk is manifested, 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)