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 one mistreats citizens of foreign countries, one infringes upon one’s duty toward one’s own subjects; for thus one exposes them to the law of retribution.”
—Johann Wolfgang Von Goethe (1749–1832)
“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)
“The Englishman’s strong point is his vigorous insularity; that of the American his power of adaptation. Each of these attitudes has its perils. The Englishman stands firmly on his feet, but he who merely does this never advances. The American’s disposition is to step forward even at the risk of a fall.”
—Thomas Wentworth Higginson (1823–1911)