Uluslararası fon piyasaları ve döviz kredileri mekanizması (analitik bir yaklaşım)
A Short history of the foreign exchange markets
- Tez No: 30850
- Danışmanlar: PROF. DR. İLHAN ULUDAĞ
- Tez Türü: Yüksek Lisans
- Konular: Bankacılık, Banking
- Anahtar Kelimeler: Belirtilmemiş.
- Yıl: 1994
- Dil: Türkçe
- Üniversite: Marmara Üniversitesi
- Enstitü: Sosyal Bilimler Enstitüsü
- Ana Bilim Dalı: Uluslararası Bankacılık ve Finans Ana Bilim Dalı
- Bilim Dalı: Belirtilmemiş.
- Sayfa Sayısı: 174
Özet
129 A SHORT HISTORY OF THE FOREIGN EXCHANGE MARKETS It is somewhat ironic that as this is written, the question of going back to so me form of fixed exchange rate system is in the news again. It epitomizes the cyclical nature of the foreign exchange markets and the frustrations of govern ments which have not been able to develop an international monetary system that can accommodate changes. In a relatively short time, the markets have evolved from a rather obscure corner of international finance to a front stage where developments are closely watched, even by the general public. Foreign exchange departments as we know them in the modern sense were started in the period between the two world wars. There were a few years when convertibility existed, and when currencies operated under a fixed exchange rate system based'on the gold and silver standards; governments stood ready to rede em currencies they had issued against a specified amount of gold or silver. The dominant currencies were the pound sterling and to a lesser extent the U.S. dol lar. As they do today, dealers accommodated clients in need of foreign currencies, but transactions were in far smaller amounts. The most rapid means of commu nication was the telegraph, used mainly for overseas transfers. Most transaction were settled by air mail. Per force, the major centres were quite isolated from each other. The World War II, there was a slow and painful period of reconstruction in the devastated countries of Europe and the Far East, which lasted approxima tely 13 years, from 1945 to 1958. The basis of a new international monetary system had been laid in 1944 at an international conference held in Bretton Wo ods, New Hampshire. Under the new system, a modified return to the gold stan dard and to convertibility would pave the way for the expansion of international trade and for the recovery of the world's economies. The Bretton Woods conferen ce also led to the craetion of two supranational bodies, the International Mone tary Fund (IMF) and the International bank for Reconstruction and Develop ment (the World Bank), which would assist in implementing the new system and foster its growth. While the Bretton Woods ysytem was a return to a metallic standard, it also consecrated the dominance of the U.S. dollar by pegging par- values of convertible currencies against it. Convertibility did not exist right away. At first, in the initial stages of re construction, par-values were established on a bilateral basis (i.e. French franc for sterling account, or for Deutsche Mark account), and many countries went off130 convertibility almost as soon as they had gone on. The first post-war foreing exchange departments, created in the late 1940s and early 1950s, were small dealing rooms staffed by technicians well versed in reading and understanding the masses of regulations that each major country had implemented. Dealing was a slow process, and transactions were concluded after extensive negotiations. There were few dealing rooms in those days, and those that did exist were usually tucked away in a far corner of the bank. The pe ople who became t dealers almost always tumbled into the job by accident, as standards for qualification did not exist; these dealers often had no background for the job apart from their often colourful personalities. The restoration of convertibility in 1958, and the improvement in communi cations - especially the advent of the teletype machine, or telex - brought a new impetus to the markets. There was a period of expansion, most notably in Great Britain and in other European countries. As the economies of Western Europe started to grow, international trade developed as well. While local markets were still relatively isolated, the telex and to a lesser extent the telephone came more into use as means of international communication.“Strong”and“weak”currencies Until 1960, the U.S. dollar's strength had been uncontested. American com panies increased their investments abroad, lured by the lower costs and greater productivity. American tourists could buy goods and services cheaply, and the U.S. balance of payments sank into growing deficits. The U.S. government was still committed to convertibility, and stood ready to exchange gold for dollars (although not to its own citizens). The first doubts about the dollar, in 1960, bro ught massive gold purchases in London. By that time, many of the major currencies were emerging as“strong”or“weak”, in reflection of their country's economic performance, in the first cate gory were the Deutsche Mark; helped by the emergence of West Germany as a major economic power, the Swiss franc, still a favourite refuge for capital; and currencies such as the Dutch guilder. In the second category were the British po und, which was fast losing its status as a major reserve currency, and the French franc. The strong French economy was being drained by costly and debilitating colonial wars, and by political instability.131 As the first signs of strain began to emerge, the central banks began ente ring the markets in open interventions, thus bringing a new dimension to mar ket activities. By current standards, the movements and fluctuations of exchan ge rates until 1968 were extremely mild. The daily changes were almost nonexistent, and the normal dealing tempo was rather slow. Secure in the know ledge that the exchange rates were fixed, commercial customers spent little time on hedging or covering strategies, except when occasional rumours of devaluati ons or revaluations arose. A The external markets were still in their infancy, and the Eurodollar pool to talled only a few hundred million dollars. The external pool had begun with the onset of the Cold War, when Eastern European countries declined to deposit the ir dollar holdings in the U.S., for fear that they would be blocked. The develop ment of the markets in Europe had not been matched in the U.S., where interest in foreign exchange was limited. The New York market was extremely insular, to the extent that quoted were made in U.S. terms (cents per currency), while Europe quoted in currency per dollar. In the early 1960s, there was feeling in Europe that the U.S. economy was immune from international developments, and that the balance of payments problem was a minor nuisance, unworthy of serious concern. The growing defi cits were of concern only to a few politicians, economists and bankers. The late 1960s The first indication of things to come occurred in 1967, when the British po und came under pressure. The British economy had been buffeted by high infla tion, low productivity and bad trade figures, and confidence in the pound was on the wane. As the British government fought to protect its embattled currency, increasingly large numbers of pounds had to be absorbed by the Bank of Eng land. For the first (but not the last) time, the central bank found itself in a situa tion where it had to sell more than $1 billion in mid-November 1967 to support the pound. When the devaluation finally took place, during the weekend of November 18, 1967, the foreign exchange markets were given ample food for thought. For the first time since the war, market forces had precipitated a change, and for the first time, massive central bank intervention had failed to prevent the inevitab le. From then on, stability was a thing of the past, and major changes would132 occur with increasing rapidity. In the U.S., the fateful decision by the Johnson administration to increase American involvement in Vietnam and to stick to a“guns and butter”policy had aggravated the external situation of the dollar. By the beginning of 1968, the drain on the gold reserves was such that official international gold payments we re suspended. The era of the fixed gold price was coming to an end. At the same time, international capital controls were introduced. This was too little, too late. The Bretton Woods system was still in existence, but was in the process of slowly unravelling. The year 1968 was marked in Europe by severe civil disorders in France, which precipitated large capital outflows and led eventually to the resignation of President de“ Gaulle. The impact on foreign exchange markets of the growing problems of the dollar and the franc was a rush of capital into the DMark, which by year-end found itself under strong upward pressure. The Germans, reluctant to let their currency revalue, fought those pressures head-on, and absorbed billi ons of dollars in the process. The Technological Revolution By the end of the 1960s, significant technological developments profoundly altered the markets, and had at least as much impact on their growth as the gat hering forces for changes in the international financial community. The advent of electronic technology led to a new era of calculators and computers; at the sa me time electronic and space technology led to a dramatic improvement in do mestic and international communications. It is difficult to remember today that in the 1960s a simple division on a mechanical calculator took approximately 30 seconds, and that compound calculations could take several minutes. Before electronic calculators came into the market, a favourite form of arbit rage was the so-called ”space arbitrage“, where one would take advantage of dif ferences in spot rates between various centres, because of the lack of efficient communication and information and information between centres. For instance one might, with a bit of luck, buy sterling against dollars in New York, sell the sterling against DMarks in London, and sell the DMarks against dollars in Frankfurt. This form of arbitrage was soon made obsolete. Electronic calculators allowed dealers to increase the speed of their transac-133 tions, and the accuracy of their calculations. Pricing, especially in forwards, which up to then had been largely done by approximation, became far more sop histicated. The new equipment permitted dealing rooms to expand vastly the scope of their operations, and foreign exchange departments were slowly merged with ot her money market operations, as the flexibility and range of their services incre ased. No longer were the dealing rooms isolated. At the same time the profound changes affecting international money markets were leading to the development of the external (Euro) markets, as flows of capital moving from country to co untry grew. The improvement in communications also had a great impact, leading not only to a greater integration of the world's major centres, but also to changes in the dealing methods of the giant banks, which could now fully coordinate the ac tivities of their overseas branches. Better communications also meant more effi cient and instant access to news and information. The computerization of the de aling room and the back office further increased the effectiveness of position- keeping and processing, and allowed the dramatic increase in business which was to take place in the years ahead. The contrast between the old dealing rooms of the 1950s and 1960s and the more modern ones was stark : consoles, screens, and all forms of sophisticated electronic equipment replaced the old telephones and telexes. An increased awareness of potential changes led to an expansion of the dea ling rooms. Banks were increasing the international portion of their business, and more overseas branches were being opened. While Europeans had always been keenly aware of the foreign exchange markets, which had such a profound impact on their economies, the Americans and the Japanese - especially the for mer - were confronted by something quite new to them, and were trying to learn fast. The rush to develop new foreign exchange departments and put new dealers in the market, dealers who did not necessarily have the proper training, led to some painful results in the years ahead. Those who thought that you could put anyone on a dealing desk, and expect them to make millions for you - and many believed it then - had some nasty lessons to learn. The end of Bretton Woods By the end of 1969, after having solemnly rejected revaluation ”for eternity“,134 the Germans had to bow to the inevitable, and revalued the mark. This took pla ce after a rather unpleasant devaluation of the French franc, which was accomp lished without prior consultations. The year 1970 was relatively calm, with only one minor shock : the floating of the Canadian dollar. For months, the Canadian dollar had been under upward pressure against the U.S. dollar, and was pressed against its ceiling. With the forwards at premium, many dealers had sold the Canadian dollars on a forward outright basis, above its ceiling, in the hope of buying it back more cheaply when it came into spot. This was probably the last time this kind of positioning was al lowed. The next year, 1971, was momentous, with the end of the Bretton Woods system. By the beginning of the year, the downward pressures on the U.S. dollar had become massive, fuelled by increasing balance of payments deficits. In the spring, the Bundesbank, flooded with unwanted dollars, started restricting cer tain market operations, and finally stopped its foreign activities in May, after re ceiving more than $1 billion a day. In quick succession West Germany, the Net herlands, Switzerland and Japan either formally revalued their currencies or let them float upward, after having had to take in billions of dollars. The Smithsonian Agreement The U.S. government, which until 1971 had refused even to consider a chan ge in the system and did not seem to believe that there was a dollar problem - only a mark or yen problem - had to make a quick turnaround. On August 15, 1971, President Nixon closed the ”gold window“, putting an end to the convertibi lity of the dollar. No longer would the U.S. be willing to exchange unwanted dol lars for gold at a predetermined price. The Bretton Woods system was dead. The burial took place in December 1971 in Washington, with the introduction of the Smithsonian Agreement. Du ring an international conference, the dollar was formally devalued, paving the way for a realignment of currencies. The new agreement still had fixed rates - to distinguish in from the Briton Woods system, the par- values were now called ”central rates“ - and bands, but few believed that it could survive long. The rapid developments of the previous two years had made the foreign exc hange markets front - page news in many countries. Further, the sharp rate135 changes led to new risks and uncertainties for corporations engaged in internati onal trade. They had to revise their strategies to cope with market fluctuations, and became more dependent on the advice of foreign exchange experts, and more active in the markets. Dealers also had to adapt to a new environment, where changes could occur quickly, and where one could no longer depend o fixed rates. What had been learned up to then about the mechanisms of devaluations and re valuations was obsolete. Strategies based on a solid theoretical background and knowledge of regulations changed to strategies based on speed of reaction and execution. The Snake The scepticism regarding the Smithsonian Agreement was soon amply de monstrated, when in the spring of 1972 the Germans added new regulations to keep the mark down, and then fostered with their European partners the creati on of a mini -system, where European currencies would float together against the dollar and would maintain narrower bands with each other. This system, fore runner of the European Monetary System, became popularly known as ”the Sna ke“. It was assumed that European currencies would fluctuate up and down to gether against the dollar, forming a statistical snake. The Snake itself soon became suspect, when the U.K. had to leave after spending billions of dollars to support the pound, which afterwards floated down. By mid-1972 the dollar was again under strong pressure, and massive inter ventions were needed to support it. The Snake was in trouble, as weaker curren cies such as the Danish crown and the Italian lira had difficulties keeping pace with the stronger mark. In the meantime, West Germany was adding regulation on regulation in a futile effort to stop the trend. The calm with which 1973 began was shattered when one of the weaker members of the Snake, Italy, took regulatory measures to support the lira. Such seemingly limited action had huge ripple effects, and like the proverbial straw, broke the back of the moribund Smithsonian system. What President Nixon had hailed as an achievement of historic proportion lasted only 15 months. A few days after the Italian announcement, Switzerland, flooded with foreign money, let the franc float. Within a few weeks, a new storm was shaking the markets, and the German and Japanese central banks had to refuse to take in more dol lars. A formal 10 per cent devaluation of the dollar was announced in February 1973, and by March, the Smithsonian Agreement was a thing of the past. From136 that point onwards, the foreign exchange markets operated under a non-system. The era of floating rates There was no international conference to herald the era of floating rates, no formalized egreements : only the simple recognition that fixed exchange rates no longer worked, and that nobody knew how to implement a new system. Instead, the major economic powers attempted to cooperate on an ad hoc basis, and conf ronted new problems as they arose. A Floating rates at least offered the advantage of eliminating the need for offi cial market interventions. Central banks had lost enormous sums of money in their open market operations, and few governments were willing at this point to incur further losses. In a floating rate environment, currencies would eventually find their own level, and imbalances created by overvaluation or under valuation would be corrected by market forces. Truly floating markets never had a chance to exist. In the first place, the Europeans continued the operation of the Snake - now reduced to six currencies - but more importantly, all the major countries, the U.S. included, decided that the markets needed monitoring, and that intervention would help the stability of the markets. The degree of intervention varied as much as the aims of interven tion, and the ”dirty float“ was thus begun. The Yom Kippur War in the autumn of 1973 set the stage for an event that would dominate and decisively influence political, economic and financial events for the rest of the decade : the rise in oil prices. Initially, an oil embargo by Arab countries on supporters of Israel (most notably the U.S. and the Netherlands) led to a sudden oil shortage and consequently to a price rise. Through a fast - develo ping chain of events, prices quadrupled by the end of the year. Up to then, the movement of the dollar had been a steady downward course, but the sudden oil price rise changed the picture radically. Western Europe and Japan were almost totally dependent on oil purchased from abroad for their energy requirements, and that oil had to be paid for in dollars. The enormous de mand for dollars dramatically changed the course of rates. In a few months, the dollar had recovered to such an extent that many of the restrictions on capital Hows instituted in the U.S. and West Germany were abandoned. In the foreign exchange markets, many dealers had become so accustomed137 to selling dollars in order to generate profits, that they did not understand at first that conditions had changed. The refusal to accept the new situation led to spectacular losses, the most notorious of which was the bankruptcy of the Hers- tatt Bank in Cologne. That small private bank lost an incredible $450 million, much of it in foreign exchange transactions. The publicity given to foreign exchange problems led to a great deal of soul- searching in the world banking community and among central banks. The very fact that a small bank like Herstatt had been able to build enormous currency positions, and that other banks were willing to deal with them to such an extent, was disquieting enough. Prompted partly by their own governments but also by concern over the wellbeing of the banking system, all the banks undertook to tighten their controls over foreign exchange operations and instituted new systems- of lines and limits. The new perception that currency movements were a two-way risk and that a large profit potential could also be a large loss potential helped to change the rather free environment which had existed until then. In the meantime, the ripple effects of the first oil shock were still making themselves felt. As a result of the price rise, inflation in the Western world incre ased dramatically, and by the summer of 1974 interest rates in the United Sta tes reached levels not seen since before World War II. Another effect was an enormous transfer of wealth, all of it denominated in dollars, from oil consumers to oil producers. The pool of Eurodollars consequently grew to unprecedented le vels, since only a small portion of dollars was invested in the U.S. The rise in oil prices had been a severe blow to the Europeans and Japanese, but is was also felt in the U.S., where oil production had been outstripped by demand. The oil import bill grew tremendously and led to large dollar outflaws. The effect of FASB8 In 1975, one development in the United States profoundly affected the fore ign exchange market and its evolution : the enactment of a new standard of acco unting for foreign assets and liabilities by the Financial Accounting Standards Board (FASB). The new rule, known as FASB8, compelled American companies with overseas operations to revalue at current market rates, on a quarterly ba sis, all assets and liabilities other than fixed assets, which would be kept at the rate of original purchase. The immediate impact of this new rule was a heavy loss-taking on foreign debts, especially in Switzerland. American companies we re forced to be even more market-oriented and aware of foreign exchange138 fluctuations; the result was a considerable increase in commercial business in the American foreign exchange markets. The first corporate advisory services ca me into being to advise clients ho w best to cope with FASB8. New York thus be came a far more important centre. By the end of 1974, the pound was again under pressure, Those pressures culminated two years later, when an all-time low of $1.55 was reached. In the meantime, the vagaries of the dollar continued. After a recurring bout of pressu re in early 1975, it recovered quite nicely in the summer, but plunged again in the fall. After the initial price rise of 1973, oil prices continued to be pushed upwards in regular instalments, and the pool of Eurodollars continued growing. Initially, the oil exporters had been content to keep their assets in dollars and to buy other currencies only when needed. However, the continuous pressure on the dollar made them uneasy. The advent of the Carter administration increased their do ubts and, with the help of their advisors, they started to formulate strategies of diversification, with certain portions of their dollar holdings converted into mul ticurrency investments. The process of diversification increased when con fidence in the Carter administration ebbed further. The dollar was again under pressure in 1976, but the focus of attention was once again the pound. Suffering from its traditional ills - high inflation and bad trade figures - it fell still further when countries which until then had kept po unds as a reserve currency sold them heavily. By the late fall of 1976 the pound had sunk to an new record, and substantial help from the IMF was required. The markets at this time disregarded the fact that oil had been discovered in the North Sea, and that Britain was in the process of becoming an oil produ cer. A turning point was reached in early 1977 when, with massive help from ot her major countries, the pound began to recover. The role of international brokers In the late 1970s the foreign exchange markets significantly changed yet again, with the introduction of international brokers. The impact was felt most in tiie American markets, which lost their last trace of insularity when they adopted the system of ”European“ - that is, currency per U.S. dollar - quotes. In ternational brokers, with their direct links between major centres, allowed an139 almost total integration at those times when dealing hours overlap. The tempo of dealing became the same in New York as in Frankfurt, and the markets as we know them finally came into being. By 1977 the U.S. was again suffering from trade and balance of payment de ficits, while countries like West Germany and Japan were in substantial surplu ses. After 1974, the Europeans and Japanese no longer fought the dollar's decli ne, partly because' they felt it was a problem that had to be handled by the Ame ricans, and because a lower dollar meant lower oil prices for them. The problems encountered in terms of greater American competitiveness in export markets we re more than compensated for by lower inflation and greater confidence in their economies. The Carter administration failed to understand that, and played right into their hand by vocally advocating an appreciation of the strong curren cies. This disastrous ”open-mouth“ policy led to a further loss of confidence in the dollar, accelerated the process of diversification, and culminated in the sharp depreciation of the dollar which took place in the summer and autumn of 1978. By then, Treasury Secretary Blumenthal had discovered the hard way that it is far easier to start a movement than to stop it. Other Western countries had become genuinely alarmed by the situation, and feared the possibility of a finan cial crisis; but in spite of heavy continuous interventions by all major central banks, including the Fed, the dollar was almost in a free fall. In the summer of 1978, the Camp David accords on the Middle East were overshadowed in the foreign exchange markets by the creation of the European Monetary System (EMS), which replaced the now anaemic Snake as a European ”zone of stability“. That announcement had the effect of increasing the pressures on the dollar, and by September and October the dollar was reaching record lows against most major currencies. Just as troublesome was the fact that the problems of the dollar in internati onal markets were making themselves felt in U.S. domestic markets. For the first time in memory, foreign exchange developments were front-page news in the American press, even in popular newspapers. The administration was pres sed by worried bankers and by other governments to take firm action to prevent a full crisis, and finally did so on November 1, 1978.140 The ”Carter package“ was a turning point for the dollar. The pressures did not disappear; years of no confidence could not be erased so easily. The dollar re ached a new low against the DMark in 1979, and the Fed undertook heavy sup port operations in the waning days of the Carter administration. The future of the markets The fortunes of the dollar are no longer one-sided. An entire generation of dealers who made their money by selling dollars had to learn that you can also make profits by buying them. The famous ”dollar overhang“ of the 1970s, that mass of money that nobody wanted, has disappeared. No one can predict what will happen in the future, under which monetary regime we will live, what will be the shape of the markets, or whether the dollar will go up, down or sideways. It is in this unpredictability that the challenge of foreign exchange dealing lies. Buying and selling currencies Dealing in the interbank market consists of buying or selling one currency against another, for specific amounts and for designated delivery dates. Currencies can be grouped into three general categories : convertible curren cies, semi-convertible currencies, and non-convertible currencies. Convertible currencies are actively dealt in interbank markets, on either a global or local scale. Semi-convertible currencies can be bought or sold only thro ugh the local central bank, at predetermined rates of exchange. In this category falls a great number of Third World currencies. Transactions are limited to docu mented commercial deals, non-convertible currencies are those whose circulation is restricted by local authorities. The rate of exchange is artificially pegged, usu ally at a much higher level than the black market (or parallel market) rate which inevitably develops. Most Eastern European countries have non- convertible currencies. In addition, there are restrictions on foreign exchange transactions in many countries. Most common are internal restrictions, where foreign exchange opera tions can only be undertaken with the local central bank, which is the only aut horized dealer with the external markets. Such restrictions are the rule in Eas tern Europe, as well as in countries such as Colombia and many African and141 Asian countries. There are three main geographic areas of convertible currency : the U.S. are- a, which comprises essentially the U.S. and Canadian dollars; the European are- a, which involves the currencies of Western Europe; and the Asian area, with the Japanese yen and the Hong Kong, Malaysian and Singapore dollars. The govern ments of these countries allow unregulated purchases or sales, and the amounts of money exchanged in the interbank market are very large. While there is no defined standard of transaction size, banks rarely deal for less than the equiva lent of $1 million per transaction, since the 1970s, a normal transaction size in major currencies in a normal market environment is the equivalent of $3 million. While certain centres obviously pay more attention to local currencies, there is a major group of currencies that is actively dealt throughout the world. Fore most is the U.S. dollar, which has assumed since World War II the role of pri mary international medium of exchange. The vast majority of deals transacted in the markets involve the purchase or sale of dollars. The pre-eminence of the dol lar stems from a number of factors, some domestic and some international : the U.S. has the world's largest capital market, and there are more dollars in the world than all other major currencies put together. Invoicing for raw materials and commodities, especially oil, gas and wheat, is in U.S. dollars. It is also im portant to note that the dollar is by far the greatest component of foreign cur rency reserves held by the world's major central banks. The other three major currencies are the pound sterling, the West German mark and the Japanese yen. The pound has lost to the dollar the role that it once had as a major reserve currency, and has suffered from recurring bouts of sel ling, but the London capital market remains the second largest in the world. The mark and the yen reflect the economic strengths of their respective countries and the increased proportion of the international trade that they have assumed. In addition, German and Japanese stocks and bonds have become an important part of international portfolios. Markets in dollars,, pounds, marks and yen can be found practically everywhere. A second group of convertible currencies are those which can be heavily de alt in certain centres, but which lack liquidity in others : the Canadian dollar, Swiss franc, French franc, Dutch guilder and Italian lira. There are many other convertible currencies which are either dealt on al local basis, or internationally as a result of commercial business : Australian, New Zealand, Hong Kong,142 Singapore and Malaysian dollars; Indian rupee; Persian Gulf currencies; Spa nish peseta; Portuguese escudo; Belgian franc; Irish punt; Austrian schilling; Scandinavian currencies; Mexican peso; Venezuelan bolivar. Most world currencies are not dealt in foreign exchange markets, because there is little use for these currencies outside their country of origin, or because transactions are severely regulated by the issuing authorities. In many countri es, there is no authorized foreign exchange dealing among banks, and only the central bank is allowed to undertake the buying or selling of foreign currencies. Major dealing Centres The world's major dealing centres are situated in three global areas : the Far East and Mid-East, Western Europe and North America. A ”major centre“ is classified as such because of the number of participants, the depth of the local market, and the influence that it can exert on other dealing centres. Each centre has certain indigenous characteristics that it does not necessarily share with ot hers, but all have common traits; each centre is also a major financial centre, with an active market in debt or equity instruments. The local interbank market is composed of the three categories of market makers mentioned above. While the three global areas are separated by distance and time, they acti vely interact with each other and are very interdependent. At the end of each day, orders are passed from one centre to the other. This can sometimes set the tone for the beginning market, and will at least provide more liquidity to the markets as they begin their session. The Far Eastern and Mid-Eastern markets Tokyo Hon Kong Singapore Bahrein Frankfurt London New York San Francisco Time* 9a.m. 8a.m. 8a.m. 4a.m. 2a.m. 1a.m. +8p.m. +5p.m. ^-previous day 5p.m. 4p.m. 4p.m. noon 10a.m. 9a.m. 4a.m. 1a.m. * Timetables are standard times. Europe, including the U.K., goes on daylight saving time from the last weekend of March to the last weekend of September. The United States is on daylight saving time from the last weekend of April to the last weekend of October. Singapore time was adjus ted forward by 1/2 hour in 1982. The Morgan Guaranty Trust Company publishes yearly an excellent book which lists all banking holidays and banking hours by country and by date. The major centres in the Far East and Mid-East, in order of time, are Tokyo, Hong Kong, Singapore and Bahrein.143 The Tokyo market deals primarily in dollar/yen - more than 90 per cent of its activities are in these currencies. There is also some business in dollar/mark and sterling/dollar. The interbank activity is dominated by the giant Japanese barks, but foreign branches of American and European banks are quite active, major customers are export manufacturers of cars and high technology, and im porters such as oil companies. The relaxation of the ”rules of underlying transac tion“ in 1981 allowed hedging and cover of financial as well as merchandise tran sactions. The central bank has always maintained a posture of active involvement. There are no restrictions in dealing foreign exchange in Tokyo, but there is heavy monitoring of dealing activity by the Japanese authorities. The Tokyo market remains relatively restricted because its trading hours do not re ally overlap with those of Western Europe. The Hong Kong market is the only major dealing centre which does not ope rate in a sovereign country; there is therefore no central bank supervision of the markets. While a great deal of foreign exchange activity is transacted through Hong Kong, there are no discernible major forces moving the markets. Dealing activities in Hong Kong concentrate on the dollar/mark, dollar/Hong Kong, dol lar/yen, sterling/dollar and dollar/Swiss. There are smaller markets in other Eu ropean and Asian currencies. The large local banks and the Asian headquarters of major European and American banks are of course very active, but the market is more diffuse. Movements in Hong Kong are heavily influenced by what takes place in Tokyo and Singapore. In addition, positions and overnight orders are passed on from North America. As in the whole Far East, late developments in the New York market can set the trend of the day, although this is not always true. Major customers are local companies and financial houses. The Singapore market matches the Hong Kong market in periodic volatility. Unlike Hong Kong, Singapore is a sovereign country and the local authorities have a keen interest in foreign exchange developments; they are active market participant. The majority of deals, as in Hong Kong, Australian and Canadian currencies. There are also active markets in local Asian currencies, besides the Monetary Authority of Singapore, major participants are foreign branches of Ja panese, European and American banks. While there is relatively less commercial business, an active deposit market adds depth to the foreign exchange market. The Bahrein market and other Gulf centres such as Kuwait benefit from ac cess to the Far East as well as Western Europe. The enormous concentration of wealth in the Gulf area has attracted all the giant banks and promoted the144 growth of local financial centres. The commercial business is of great size, even though many institutions prefer to deal directly with Europe and North America. One of the features of the Gulf area is that it is open on Saturdays and Sundays, which allows to a limited extent a continuation of the weekly dealing in other centres. However, the Gulf area is intrinsically a limited market, and has relati vely little depth. Besides the local currencies, the U.S. dollar, the pound sterling and the mark are the most actively dealt currencies. There is a limited amount of dealing in yen and Swiss francs. Western Europe Frankfurt London New York San Francisco Tokyo Hong Kong Singapore Bahrein Time 9a.m. 9a.m. 3a.m. Midnight 4p.m. 3p.m. 3p.m. 11a.m. 5p.m. 4p.m. ll.am. 8.a.m. Midnight 11p.m. 11p.m. 7p.m. The foreign exchange market saw its birth and growth in Western Europe, and it is the European banks and bankers who have been instrumental in the worldwide expansion of the markets. While not as pre-eminent as it used to be, Western Europe still remains the global area where the great majority of dealing takes place. In addition to the four major centres - Frankfurt, London, Paris and Zurich - there are also many smaller but important ones : Amsterdam, Brussels, Copenhagen, Dusseldorf, Geneva, Hamburg, Luxembourg, Madrid, Milan, Oslo, Rome and Stockholm. Many countries are involved, all close to each other in terms of time and distance, and there are many financial centres closely linked. The London market probably still remains the most active of all the world's centres in terms of participants and activity, although New York has become a strong contender. All the world's large banks have branches or subsidiaries in London, and the activity encompasses dealing in any imaginable convertible cur rency. In addition, London has developed what is by far the largest deposit mar ket in Eurocurrencies. The only restrictions that the Bank of England has appli ed to the market have related to dealing in sterling when it was under attack. While British banks have always been and remain major participants, the market is solidly supported by foreign banks. The late 1960s saw a flood of fore ign branches, especially from the U.S. (one street in the City, Moorgate, was dub bed 'Tank Alley”). Despite some retrenchment of activity in the mid-1970s, the market has essentially kept its liquidity. In the late 1970s there was an enormo us rush of investment funds, especially from the Middle East, which contributed to a period of strength for the pound. The Bank of England is one of the world's145 most sophisticated in foreign exchange matters. It has had to learn about the markets the hard way, when the defence of the pound became a matter of natio nal priority. It maintains an active dealing room, and is a constant market parti cipant. Because of its size, the London market sometimes receives and executes ext remely large orders. As a result, it can often be a trendsetter and is watched clo sely by all other markets. The Paris market has remained a major centre, although its fortunes seem to fluctuate with those of the French franc. It tends t be more of a self-contained market, and shares with Frankfurt, Milan, Rome, Amsterdam and Tokyo the technicality of a daily fixing. (In Tokyo, the fixing is done by telephone.) The fixing is the formalization of a rate of exchange between the local cur rency and other currencies dealt in the marketplace. This rate of exchange is es tablished after orders to buy and sell are matched. Its value is relative : it can be used to establish buying and selling rates for small operations on that day. The level of the fixing can be of psychological value when certain participants, inclu ding the central bank, may wish to influence future trends. In Paris, the fixing used to take place in the Bourse (Stock Exchange) in a face-to-face auction market where authorized participants transacted their busi ness while mamtaining telephone contact with their dealing rooms. As can be imagined, this provided colourful sessions. Nowadays, the level of the daily fi xing has little influence on interbank market developments. The major participants in the Paris market are the French banks, most of which are now nationalized, and branches of other European and American barks. Besides the franc and the U.S. dollar, the other major European currenci es are most heavily dealt. The Banque de France is an important factor in the market, especially when the franc is under pressure. There is a great deal of commercial business transacted, as France is a major trading country. Although Frankfurt is not the capital of West Germany, it is its financial centre and one of the world's largest markets. There are other dealing centres in Germany, in Dusseldorf, Hamburg and Munich, but Frankfurt is the major one. The volume of business transacted in Frankfurt reflects the economic power of the country. It is a dynamic market, often a trendsetter, and can absorb146 transactions of enormous size. Foremost participants are the giant German banks, as well as the branches of major Japanese, European and American banks, The German central bank - the Deutsche Bundesbank, known to market participants as“the Buba”- is al most always a major factor in the Frankfurt market. It is often at its most visible during the daily fixing, which remains a closely watched statistic. The Bundes bank is the instrument through which the German government implements its exchange policies, which have always been a national priority in Germany. The Frankfurt market is far more restricted than London in terms of curren cies dealt. The overwhelming majority of transactions involve the U.S. dollar and the DMark, with a measure of business in sterling, Swiss francs, yen, and other major European currencies. Participants in Frankfurt make heavy use of the New York market at the end of their dealing session to bring their positions to desired levels. The Zurich market remains the fourth major dealing centre in Europe, even though the Swiss franc has lost most of the importance that it had in the 1960s and 1970s. Zurich, while not the capital of Switzerland, is the financial centre; there are other active centres in Basel, Berne, Geneva, Lausanne and Lugano. Switzerland remains a haven for capital, and its giant banking institutions continue to thrive. The Swiss franc remains one of the world's major currencies, which is a constant problem for the Swiss National Bank. Since the Swiss franc has a dual role, as the currency of a very small country and as an important in ternational medium of exchange, the National bank must maintain a delicate ba lance and ensure that international considerations do not play havoc with do mestic policies. It is a measure of the skills of the National Bank that it has been quite successful. Switzerland is a complex marketplace, more heavily influenced by financial than by commercial considerations. It is always closely watched by other centres as a possible trendsetter. The supremacy of the giant Swiss banks is a well pro tected prerogative, and foreign institutions in Switzerland which have tried to compete with them have found it impossible to do so. There is also, in spite of mutual suspicion, a close relationship between the National Bank and the big private barks.147 Mot heavily dealt besides the Swiss franc, the mark and the U.S. dollar are other major European currencies. In times of crisis, the French franc and the Ita lian lire can be dealt in considerable size. North America New York San Francisco Tokyo Hong Kong Singapore Bahrein Frankfurt London Time 9a.m. 6a.m. 10p.m. 9p.m. 9p.m. 5p.m. 3p.m. 2p.m. 5p.m. 2p.m. *6a.m. *5a.m. *5a.m. *la.m. 11p.m. 10p.m. The emergence of the North American markets as major world markets is relatively recent, dating back to the mid 1970s. Before that, the markets were rather provincial and self-contained. Until the fall of the U.S. dollar, few Ameri cans were aware of, or interested in, foreign exchange developments, and there was a philosophy of insularity regarding the U.S. economy, which was felt to be immune from international monetary developments. Until the Carter administ ration, the Federal Reserve Bank never made any change in monetary policy be cause of international considerations. The fall of the dollar, its effect on the earnings of multinational corporations, and the emergence of New York as a major international financial centre in the late 1970s changed these attitudes. It is however the influx of foreign banks in North America, and the development of rapid and effective communications, which have been catalysts in the explosive growth of the foreign exchange mar kets in North America. Statistics compiled by the Federal Reserve Bank of New York show that bet ween April 1977 and March 1980 the gross volume of foreign exchange business transacted in the U.S. market grew by more than five times. The growth in the number of market participants was just as spectacular, and in a few years, New York has challenged the supremacy of all the other major worldwide centres. The New York market, even in the days when it was more of a minor centre, always dealt a remarkable diversity of currencies, with an extremely active mar ket in Canadian dollars and some dealing in various Latin American currencies. One remarkable feature of the U.S. markets is the total absence of official regulations. There is no policing body, and the Federal Reserve Bank has only suggestions and guidelines for foreign exchange dealing rooms. In spite of this absence of regulations - or perhaps because of it - the American foreign exchange markets have, with rare exceptions, been remarkably efficient and scandal-free.148 The New York market is by far the largest in the U.S., rivalled in size and depth only by the London market. Is has a wide component of major market ma kers, large American banks and foreign branches of European and Asian banks. Among the most actively dealt currencies, besides the U.S. dollar, are the Cana dian dollar, the pound sterling, the mark and the yen. There are also active mar kets in Swiss and French francs and Dutch guilders, and to a lesser extent Belgi an francs and Italian lire. The development of an International Banking Facility (IBF) may lead to further growth. It' has already given new depth to a Eurocurrency market (still essentially Eurodollars) whose early development was fostered by the creation of“offshore”facilities, such as Nassau and Cayman Islands branches, which are mostly imaginary creations - the dealing is done in New York. A very important component of the New York market is the so-called Edge Act banks - wholly ow ned subsidiaries of out-of-state banks established in New York for the purposes of international banking. Often, the dealing room of an Edge Act bank is more active than that of the bank's headquarters. Finally, in addition to full branches of foreign banks there are egencies, which in the past were not subject to domes tic Federal regulations but whose business was restricted. As can be seen, there is a profusion of market participants. The Federal Reserve Bank of New York, which acts as the sole agent of the U.S. Treasury in international monetary matters, has been an on-and-off market participant. Its authority and the scope of its involvement are very limited, but it does have a policy of watching the markets closely. There is a great variety of commercial and financial business transacted in New York, and developments are closely watched the world over. Two market centres closely related to New York exist in Boston and Philadelphia. The Chicago market, long a satellite of New York, is becoming a centre in its own right. Two factors have contributed to its growth. : the existence of the In ternational monetary Market (IMM), and the influx of foreign banks and Edge Act subsidiaries. The IMM, which has itself experienced a great deal of expansi on since its creation in the early 1970s, has added to the depth (and sometimes to the volatility) of the local market. Non-Chicago banks have effectively compe ted with local banks for the large amount of commercial business which exists in the Midwest. A large proportion of that business, which used to go to New York, now remains in Chicago.149 California, with its two centres in Los Angeles and San Francisco, has yet to develop into a true market, although the many out-of-state banks which have opened subsidiaries hope it will. It is of course a natural bridge between the New York and the Tokyo markets, and there is also a great deal of commercial busi ness ongmating from the West Coast. While there is optimism that activity will pick up, it must be noted that over the years increased business has not really materialized. The financial centre of Toronto, which has taken over from Montreal since the late 1970s, has an active foreign exchange market dominated by the giant Canadian banks. Dealing is primarily in Canadian and U.S. dollars, but also in pounds sterling, marks and yen. The Bank of Canada has been active in the mar ket, especially when the Canadian dollar has been under pressure. An influx of foreign banks, mostly American and European, has in recent years added new depth to the market. The Toronto market maintains a very close relationship to the New York and Chicago markets. Other Centres There are of course many more local centres in the world. There are active markets in the Philippines, Australia, South Africa, Western Europe, and Pana ma, but the true trendmakers are the major centres described above. It is interesting to note that of 129 major world countries listed in the table, 58 have a private banking system. Only in 50 of these countries can banks enga ge in some form of foreign exchange activity; in the remaining 17, the private banks must conduct foreign exchange transactions with the central bank, under well defined regulations and with the proper documentation. Foreign exchange regulations vary from those affecting the local currency to those affecting external currencies, but are usually designed to prevent what the local government considers excessive sales of the local currency or excessive purchases of foreign currencies. The IMF publishes every year a book of official regulations - a rather thick book, it must be said. The most common regulations allow currency transactions only after presen tation of invoices or bills of lading proving the commercial nature of the transac tion. Restrictions on the amounts of foreign currency that individuals are allo wed to possess are also quite common. Among more minor restrictions are those imposed on forward transaction dealings, for instance in Denmark, Ireland and France, between local and external banks.
Özet (Çeviri)
Özet çevirisi mevcut değil.
Benzer Tezler
- Makro ihtiyati politika ve finansal istikrar ilişkisi: Türkiye'de konut sektörüne yönelik araçların etkinliği
The relationship between macro prudential policy and financial stability: Effectiveness of tools for the housing sector in Turkey
MURAT SARI
Yüksek Lisans
Türkçe
2022
EkonomiGalatasaray Üniversitesiİktisat Ana Bilim Dalı
DR. ÖĞR. ÜYESİ ZEHRA YEŞİM GÜRBÜZ