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:
“Meanwhile I, deserted, was lamenting a little to myself your long delays in foreign loves, until sleep with its pleasing wings compelled me, fallen.”
—Propertius Sextus (c. 50–16 B.C.)
“It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic, and sub-atomic, and galactic
structure of things today. And you have meddled with the primal forces of nature! And you will atone! Am I getting through to you, Mr. Beale?”
—Paddy Chayefsky (1923–1981)
“Men’s hearts are cold. They are indifferent. Not all the coal that is dug warms the world. It remains indifferent to the lives of those who risk their life and health down in the blackness of the earth; who crawl through dark, choking crevices with only a bit of lamp on their caps to light their silent way; whose backs are bent with toil, whose very bones ache, whose happiness is sleep, and whose peace is death.”
—Mother Jones (1830–1930)