and also of prudent portfolio management:
The perception problem stems from the continuing growth of U.S. deficits, which equates to your continually borrowing money from a bank. At a certain point, no matter how good your credit is, the bank will stop lending you money because you’ve already borrowed so much in the first place. In the case of the United States, no one is sure exactly where that point is, but let’s just say we don’t want to find out. In recent years, the U.S. Congress has had to raise its debt ceiling to accommodate its growing need to borrow. At the time of writing, the U.S. debt ceiling stood at more than $28.5 trillion.
The portfolio-management problem arises from the need to diversify assets in the name of prudence. Due to the high proportion of U.S. dollars in global forex reserves, forex reserve managers need to be cognizant of the risks they face if there is a sharp drop in the U.S. dollar’s value. This was particularly relevant after the financial crisis when the U.S. dollar started to weaken.
The result has been an effort by many national governments to begin to diversify their reserves away from the USD and into other major currencies. The euro, the Japanese yen, the British pound, and to a lesser extent the Australian dollar have been the principal beneficiaries of this shift. But before you think the sky is falling, the USD remains the primary reserve currency globally.
In terms of daily forex market trading, national governments (or their operatives) have become regular market participants over the last few years. Generally speaking, they appear to be engaging in active currency reserve management, selling USD on rallies, and buying EUR on weakness. But they’re also not averse to then selling EUR on subsequent strength and buying USD back on weakness.
The Bank for International Settlements
The Bank for International Settlements (BIS) is the central bank for central banks. Located in Basel, Switzerland, the BIS also acts as the quasi-governmental regulator of the international banking system. It was the BIS that established the capital adequacy requirements for banks that today underpin the international banking system.
As the bank to national governments and central banks, the BIS frequently acts as the market intermediary of those nations seeking to diversify their currency reserves. By going through the BIS, those countries can remain relatively anonymous and prevent speculation from driving the market against them.
The Group of Twenty
The Group of Twenty, or G20, is a forum for the governments and central bank governors of the world’s 20 largest economies. Members include the developed markets and the larger emerging markets, including Mexico, Brazil, China, and South Korea, along with Saudi Arabia. The G20 superseded the G7 and the G8 as the global leaders’ summit to keep an eye on. G20 summits take place each year; depending on the circumstances, currency values may be on the agenda for these meetings, and the communiqué, the official statement issued at the end of each gathering, may contain an explicit indication for a desired shift among the major currencies. If currencies are not a hot-button topic, the G20 will include a standard boilerplate statement that currencies should reflect economic fundamentals and that excessive currency volatility is undesirable.
Конец ознакомительного фрагмента.
Текст предоставлен ООО «ЛитРес».
Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.
Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.
