Privatization of foreign currency risk, also known as foreign currency risk privatization, is a financial system established under the Bretton Woods system in which foreign exchange risk was borne by the public sector, but when it collapsed, risk was privatized, as exchange rates are able to fluctuate freely.
In the scheme, exchange rates cannot be held constant by central banks. To reduce risk, those firms trading in foreign markets needed to be able to change their mix of currencies and assets held in the present and future in line with the changing perception of foreign exchange risk (Ee). The new international financial system is highly liquid, volatile, contagion prone, has huge volumes, and is ever expanding.
Famous quotes containing the words foreign, currency and/or risk:
“Don’t use that foreign word “ideals.” We have that excellent native word “lies.””
—Henrik Ibsen (1828–1906)
“Money is the worst currency that ever grew among mankind. This sacks cities, this drives men from their homes, this teaches and corrupts the worthiest minds to turn base deeds.”
—Sophocles (497–406/5 B.C.)
“I’m a very smart guy. I haven’t a feeling or a scruple in the world. All I have the itch for is money. I am so money greedy that for twenty-five bucks a day and expenses, mostly gasoline and whisky, I do my thinking myself, what there is of it; I risk my whole future, the hatred of the cops ... I dodge bullets and eat saps, and say thank you very much, if you have any more trouble, I hope you’ll think of me, I’ll just leave one of my cards in case anything comes up.”
—Raymond Chandler (1888–1959)