Goliath's tone was full of confidence, he knew in his heart that Germany just wanted to teach Italy a lesson, but did not want the lira to really collapse, which would not do Germany any good, on the contrary, with the delicate relationship between Italy and Germany, if the lira collapsed like Mark, it would only be bad for Germany.

At this time, if you go to Schlesinger to borrow money, you will definitely be able to borrow it.

However, Ciampi did not have much confidence in this, not that he did not have confidence in borrowing money from Germany at this time, but that he really did not have confidence in the lira.

As for the reason...... Campi didn't know, he just felt uneasy in the dark, a bit like a trader's sense of disk, but not exactly, if I had to say a closer reason, it was probably the instinctive intuition that Campi had developed with rich experience after years of immersion in the financial field.

Of course, just because Qian Pi doesn't know doesn't mean that others don't know.

As a hanger, if Shen Jiannan could sense Qian Pi's uneasiness now, he would definitely give a thumbs up to the richest and most chaotic central banker.

The operation of the European exchange rate mechanism is based on the intervention of central banks in exchange rates to maintain a limited range.

Each of the participating currencies of the Exchange Rate Mechanism is assigned a target exchange rate for the European Currency Unit, known as the central exchange rate of the European Currency Unit, known as the national currency. The ratio of the central exchange rate of any two European currency units is defined as the bilateral central exchange rate between the two participating countries. Bringing together all bilateral central exchange rates forms the European Exchange Rate Mechanism (EFEM) parity gate.

It is the responsibility of each participating country to keep its currency in the grid, allowing for a predetermined range of fluctuations. The currencies of the participating countries fluctuated by ± 2.25%, but some currencies were allowed to float within a much larger range, ±6%. In order for such a mechanism to work effectively, members should coordinate their monetary and fiscal policies and implement an orderly economic structural reform.

Member States should also agree to direct intervention in the foreign exchange market to maintain their currencies' position in the European exchange rate mechanism.

In the past ten years since the birth of this exchange rate mechanism, it has been running well, and the central bank no longer has to worry about the harm caused by the violent fluctuations in foreign exchange.

But that's in the past.

In the beginning, the European economic and monetary system established a new monetary unit, the aegus. This monetary unit is derived from a currency-weighted average, weighted by GDP in 1979 and based on the currencies of the member states of the European Economic and Monetary System in 1979. The components of the European currency unit are periodically adjusted to reflect changes in the relative GDP of member countries.

When a new currency is incorporated into the European economy and monetary system, the composition of the European monetary unit changes.

Everything, it seems, is perfect.

It's just that in the midst of this, there is a small problem.

The problem is that under the European exchange rate mechanism, the level of the economy is different from country to country, so the interest rate is completely different from country to country.

So, this little problem means that you can't lose money.

That's right, it's a sure win.

This is a very ridiculous little problem, and anyone who has paid enough IQ tax knows that in the field of investment, there is no such thing as a guaranteed profit or loss. When a person tells someone that he can guarantee a safe profit, either he is God or he is a liar.

But as the saying goes: if God is reliable, the sow will go up the tree.

If there were people who could make sure they didn't lose money, then the financial markets would have ceased to exist a long time ago.

However, interest rate differentials between countries do provide an opportunity for smart speculators to make a profit, and this opportunity is what became known as the 'convergence trade'.

What is Convergence Trading?

It's a complicated thing.

You can probably cut off the stone position, look for securities that are mismatched relative to other securities, go long at a low price, and sell a high price. There are generally four types of general transactions: convergence of sovereign bonds, convergence between new and old government bonds, and convergence of securities markets.

In short, it can be understood that the common monetary unit is lower than the EU, but there are different interest rate differentials across countries, which means that traders and investment managers are free to invest in the currencies of the European Exchange Rate Mechanism countries with the highest returns, without worrying about exchange rate risk, because the exchange rate of currencies is fixed within the EC.

Why?

It is also the EC exchange rate mechanism, when the currency of a member state rises or falls to the floating margin, the central bank of that country is responsible for stabilizing the exchange rate according to the operation of the exchange rate mechanism.

One of the key factors contributing to capital inflows is the growing perception by international investors that the interest rate differentials in favour of high-yielding European Exchange Rate Mechanism currencies will increasingly overestimate the actual risk of exchange rate depreciation in the context of the fact that the EFEM member countries are in a process of moving closer to the European currency EGU.

As you can imagine, speculation without worrying about exchange rate movements almost means that there is no profit or loss, and the central banks of various countries will pay for it anyway.

The preference for convergent trading can be seen almost everywhere. One equity portfolio manager claimed that it was seen as the equivalent of "government-sponsored hedging transactions." The European Exchange Rate Mechanism has fueled the alarming popularity of a new class of money market mutual funds, which specialize in trading short-term securities of foreign governments with high interest rates.

As one equity portfolio manager put it in trading: "Why stare at the yield in the West German mark government bonds when you can get higher yields from Spanish or Italian government bonds without taking compensatory risks?"

As a result, the European Exchange Rate Mechanism has spurred the popularity of a new class of money-market mutual funds that specialize in trading short-term securities of foreign governments with high interest rates, at an alarming rate.

According to Morningstar's estimates, in 1989~1992, these funds attracted more than $20 billion from investors. The main securities investment behavior of these funds is convergence trading. As for the overall size of market positions, the IMF has calculated that the total size of convergence transactions could reach $300 billion.

That's what Campi has always been worried about electronic nomads, even though he doesn't know what the actual amount of convergent transactions made by global capital over the computer internet is.

Bell Bell Bell –

At the London International Financial Exchange, the piercing opening bell rang on time, and the traders in red vests who had already prepared for their positions were suddenly in high spirits.

Schlesinger's talk in front of the media was just yesterday, and everyone knows that the market is going to have a tense and exciting day today.