Rebirth of the Financial Overlord

Onecanadasquare 36th floor, Capital One Investment Company.

There are more than one hundred square feet of comprehensive meeting room, the smooth marble floor is spotless, and the white ceiling ceiling is the most expensive Daikin central air conditioner in the world.

On the wall of the central area of ​​the office, a LitePro series projector is hung, and rows of writing are clearly displayed on the fluorescent screen.

eRm, the European Community Exchange Rate Mechanism.

According to the European Monetary System, the currencies of Western European countries no longer peg to gold or the US dollar, but to each other; each currency is only allowed to float within a certain range of exchange rates. The central bank has the responsibility to intervene in the market by buying and selling domestic currency to stabilize the exchange rate of the country’s currency within the prescribed range;

Within the specified exchange rate fluctuation range, the currencies of member states can float relative to the currencies of other member states, and the exchange rate between the currencies of the member states is based on the German mark.

At the ten-meter-long oval conference table, Shen Jiannan, Robert, John, and the core members of Capital One London, William and Andy Smith, and Yu Zheng sat quietly on the chairs, facing the projector panel.

William's secretary, Mary Snoel Hunter, dressed in a fitted suit and holding a pointer to explain the basic concepts of the exchange rate mechanism of the European Community.

"The exchange rate of the currency of the member countries sets a fixed central exchange rate, allowing the exchange rate to fluctuate within a certain range up and down the central exchange rate.

Its purpose is to reduce currency fluctuations in Europe, so that companies do not have to worry about violent exchange rate fluctuations that will defeat their business models when investing and trading.

For more than ten years, the mechanism has worked well, stabilizing the currency without extreme unification of the currency.

All participating currencies allow their exchange rates to fluctuate within a small range. If flexibility is not enough, a country can negotiate depreciation issues with its European partners. These rules provide some governments with the possibility of using interest rates to manage the economic cycle. This system balances the objectives of exchange rate stability and interest rate flexibility. "

"..."

William’s secretary is certainly not ugly. Mary, who was just 22 years old, was just when she was young and beautiful. The exquisite features, beautiful curves and crisp voice made people both visually and aurally It feels very comfortable.

Her basic skills are also very solid. As a top student in the School of Economics at the University of Cambridge, telling about an exchange rate mechanism is not a piece of cake.

Soon, after Mary Snow Hunter finished explaining the basic concepts, she glanced at the current big boss.

Shen Jiannan nodded in recognition, turned around and asked the people sitting there.

"What do you think about eRm."

The few people present looked at each other, except that William probably knew, and for a while did not understand what his boss meant.

Shen Jiannan raised his eyebrows, took out the cigarette and lit it without any restraint.

The smoke flowed into the lungs along the breath, and eroded in the body time and time again. When it wandered through the body for a week, this product was very unscrupulous and sprayed second-hand smoke to everyone present.

"In this way, let me put it another way. Within the eRm exchange rate system, do you think it has any flaws."

The guys present are all human beings.

Savoring Shen Jiannan's words carefully, guessing his purpose of convening everyone for a meeting in the middle of the night.

Soon, someone spoke up.

Andy Smith, a Swedish currency expert, has been affiliated with the Reddy Hedge Fund for the past ten years.

Now, he is the investment manager of Capital One.

"From the exchange rate mechanism, the biggest problem is the communication between the member states, and there is a certain gap in the economic strength between countries. The linkage mechanism will cause some deviations in exchange rate coordination."

"However, this problem is not a big one. Central banks have the responsibility to maintain such coordination in exchange rates."

"......"

"......"

Shen Jiannan is fairly satisfied with Andy Smith's response. If he can't even see this basic problem, he might as well raise a pig with an annual salary of 300,000 US dollars.

After smoking another cigarette, Shen Jiannan extinguished the cigarette **** with a smile.

"Then what if central banks are unable to intervene in such exchange rate coordination?"

"..."

A pair of eyes, big eyes stared with small eyes, except for Robert John, who was still a little confused, William and Andy Smith couldn't help swallowing.

Shen Jiannan smiled terribly.

Both of them are smart people. William, as the head of London, probably has guessed, and Andy Smith, as a currency expert, also keenly felt something.

"OK. I think you already know my purpose. At present, the merger of Germany has caused a huge loophole in this system. With the current strength of the mark, the pound and the lira are facing great depreciation pressure. Now, let us analyze how we can use this loophole to make a fortune."

Gudong!

Gudong!

People are most afraid of association.

Reminiscing about the operations Shen Jiannan had always allowed himself to perform, William and Andy Smith swallowed together.

"Boss. Do you want to sell Britain?"

Snapped!

Shen Jiannan snapped his fingers, and he did not hesitate to cast an approving look at Andy Smith. He was able to guess his purpose so quickly. The title of currency expert is not a white belt.

At the end of the 1970s, affected by the oil crisis, the British economy plunged from the world's factories into a peat swamp. With Margaret Thatcher's reign to promote privatization, the British economy temporarily got rid of the downturn crisis.

However, due to the privatization reform process, a large number of state-owned assets were sold cheaply to the capital of other countries, and the market was transferred from the British mainland to the European and North American markets. However, the US financial crisis broke out and the economy After a downturn, with the decline of the North American market, the British export industry was severely restricted, causing a large number of ordinary people to lose their jobs.

According to the latest statistical report of the National Bureau of Statistics of the United Kingdom, the growth rate of gDP in the third quarter of 1991 in the United Kingdom worsened than the zero growth in the second quarter, which was negative 0.5%, the largest decline since 1990. The report shows that the annual growth rate of gDP in the third quarter of last year was 0.3%, a 16-year low.

The data shows that in the first three quarters of this year, British industrial production fell by 0.72 month-on-month. The weakness of the manufacturing industry was the most obvious, with a quarter-on-quarter decline of 1.0. At the same time, industrial investment fell by 5.41%, the largest drop in 23 years. Not only that, the output of the service industry, which accounts for 2/3 of the UK's gDP, fell 0.4% in the third quarter.

The European exchange rate mechanism was formulated by the European Economic Community in 1979, limiting the exchange rate fluctuation range of eleven European currencies ~www.readwn.com~ The original intention was to maintain the stability of the exchange rate between currencies. However, this exchange rate mechanism has a fatal weakness: it can only be maintained by coordinating economic policies between countries to maintain close fundamentals.

If the British inflation rate is higher than that of Germany, it will put pressure on the exchange rate mechanism, and the interest rate differential between the two countries will also impact the exchange rate mechanism.

Then comes the problem. With the development of the Internet, the scale of foreign exchange market transactions has reached astronomical literacy. In the past, the ability of the central bank to intervene in the national currency with tens of billions of dollars in foreign exchange reserves has been greatly weakened.

Taking a look at Andy Smith with interest, Shen Jiannan spoke.

"Congratulations, you got it."

"But boss, that's the Bank of England."

Bank of England?

So what?