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:
“If the dignity as well as the prestige and influence of the United States are not to be wholly sacrificed, we must protect those who, in foreign ports, display the flag or wear the colors of this Government against insult, brutality, and death, inflicted in resentment of the acts of their Government, and not for any fault of their own.”
—Benjamin Harrison (1833–1901)
“There is no legislation—I care not what it is—tariff, railroads, corporations, or of a general political character, that all equals in importance the putting of our banking and currency system on the sound basis proposed in the National Monetary Commission plan.”
—William Howard Taft (1857–1930)
“Risk! Risk anything! Care no more for the opinion of others, for those voices. Do the hardest thing on earth for you. Act for yourself. Face the truth.”
—Katherine Mansfield (1888–1923)