And then pound had a slang name “cable” already. That was associated with the factor that transactions were conducted on the telegraph and the information was transferred by cable. In 1930 in the Swiss city named Basel the Bank of the International payments has been created. The purpose of creation was financial support of the young independent states and the states temporarily testing deficiency of the payment balance.
Bratton Wood conference has been conducted in the USA. It has been counted as the termination of the American-British rivalry. There were two largest figures at conference: John Maynard Keynes (England) and Harry Deckster Whyte (USA). They manage to create and accept the new order of world financial system development in current conditions.
Main notice of Bratton – Wood conference.
” The international currency fund becomes the major institute supervising the international financial and economic attitudes; ” The currencies playing a role of the international reserves (dollar and de facto pound sterling) are proclaimed; The adjustable parities of currencies adhered to US dollar (the deviation 1 % is possible) established; the dollar is adhered to gold (ounce of gold – $35); ” Members of IMF have the right to change parities only with the consent of IMF; ” On transitional end all currencies should become convertible; for observance of this principle all governments undertake to store the international reserves, and if necessary – to make interventions on currency markets.
The program of restoration of the European economy has been accepted in the USA for the suspension of communism approach. The USA state secretary Marshall depicts the plan in his report. According to following plan the economy of Europe will be improved up to that level when it can independently support the military potential. One of the problems was satisfying of “dollar famine”. If in 1949 dollar obligations of the USA to Europe made 3.1 billion they have reached 10.1 billion dollars.
The majority of the European countries declare free convertibility of the currencies.
Japan has declared convertibility of its own currency. After the announcement of convertibility of the basic currencies it became clear, that the USA cannot stay able to support the price of $35 for ounce of gold anymore. Dollar inflation has made threat for the USA.
Kennedy administration had been accepted a number of incorrect actions – the tax to the percentage differential raising costs of foreign borrowers, and the program of voluntary restriction of foreign credits is entered. The tax and restrictions were an incitement to occurrence of the new market – the market of Eurodollars.
There was a devaluation of English pound that has stroked last blow on illusory stability of Bretton Wood system. In 60-s deficiency of the balance of payments in the USA leads to reduction of gold reserves with 18 up to 11 billion dollars. There is an increase of external duties of the USA simultaneously to it.
Interest rates in the USA that generate the strongest crisis of dollar are sharply reduced. There was a massive capital outflow from the USA to Europe where the level of interest rates was higher.
Germany and Holland declare temporary free fluctuations of the currency rates.
Growth of deficiency of the paymen balance of the USA has compelled the president Richard Nickson to suspend convertibility of dollars in gold.
The last attempt to keep Bretton – Wood system has been undertaken at the meeting in Smithsonian institute in Washington. The interval of deviations of exchange rates from parities has been increased up to 4.5 %.
To keep borders of an interval it was very uneasy.
And later Bundes Bank has lead intervention for the sum of 5 billion dollars. It was the enormous sum at that time, but it has not brought the success. Currency stock exchanges in Europe and in Japan should be closed temporarily and the USA have declared devaluation of dollar on 10 %. The developed countries have stopped to support the fixed parities and were started up in currency navigation.
The USA had cancelled stage by stage with the tax to percentage differential and the program of voluntary restriction of foreign credits.
The Bratton-Wood system had stopped its existence.
Last years of Bretton – Wood system existence currency traders extracted big speculative profit during the periods following the termination of interventions of the central banks. After the refusal of the rates the opportunity of such profit extraction became strongly limited. Many banks have incurred large losses, and two known as “Bankhaus Hershtadt ” in Colon and ” Franklyn National ” in New York – even have gone bankrupt because of unsuccessful speculative operations.
The Jamaican conference (Kingston) has taken place. The representatives of major world states have generated new principles of World currency system formation. The states have refused use of gold as means of a covering of deficiency at the international payments.
The interstate organizations regulating currency attitudes, convertibility of currencies act as basic elements of new system. National currencies of the states act as payment means. Commercial banks act as the main mechanism by means of which the international currency transactions are carried out.
European Voluntary System (EVS) is created. Core of EVS is the grid of cross-countries – exchange rates with the central and boundary values of exchange rates. Basically EVS reminds Bretton Woods. If the cross-country-rate comes nearer to the border, both parties are obliged to carry the intervention out. Deutch Mark is a key currency of EVS.
Gradually ecu becomes not accounting, but the physical tool. Traveler’s cheques denominated in ecu and credit cards are issued, banks open deposits in ecu.
There was a new European currency called Euro which replaced ECU by its self. 11 European states have fixed exchange rates in relation to Euro. The European central bank started to operate a currency policy of the European currency union (EMU). The fixed exchange rates of participants of the European currency union to
EUR/LUF 40.3399 Luxembourg franc
EUR/BEF 40.3399 The Belgian franc
EUR/IEP 0.787564 Irish pound
EUR/FIM 5.94573 The Finnish mark
EUR/PTE 200.482 The Portuguese escudo
EUR/ESP 166.386 Spanish peseta
EUR/ITL 1936.27 Italian lira
EUR/FRF 6.55957 The French franc
EUR/DEM 1.95583 Deutch mark
EUR/NLG 2.20371 The Dutch gulden
EUR/ATS 13.7603 The Austrian shilling
As against other financial markets currency market is characterized by a great volume of the tenders, the lowest cost of spent transactions, and the fastest movement of money resources. It is the unique world market working 24 hours a day. Its liquidity has increased up to 1 billion US dollars a day.
Now operations at the currency market are the basic source of incomes of world conducting banks, such as: Chase Manhattan Bank, Barclays Bank, Swiss Bank Corporation and so on. Soros’s gamble on sale of English pound against DM which has brought billion dollars of net profit within 2 weeks became classical, having made Soros famous and having his charities begun.
The opportunity of work in the financial markets of Asia, Europe and America became accessible, due to their association in one global communication network. 24 hour access on the currency market allows to open and close positions during optimum time and under the best price. Big profit can be extracted at rather small deposit during a short time interval. One phone call or simple pressing a key of “mouse” (at carrying out of operations with the help of our information-trading system) is enough to open position.