Capital One Investments, 36th Floor, OneCanada Square.

With more than 100 square feet of comprehensive meeting rooms, spotless marble floors and white ceilings, it is the world's most expensive Daikin central air conditioning.

On the wall in the center of the office hangs a projector from the LitePro series, and rows of writing are clearly displayed on the fluorescent screen.

ERM, European Community Exchange Rate Mechanism.

According to the European monetary system, the currencies of Western European countries are no longer pegged to gold or the dollar, but to each other; each currency is only allowed to float within a certain exchange rate range, and once the prescribed exchange rate fluctuation range is exceeded, the central banks of each member country have the responsibility to intervene in the market by buying and selling their own currencies to stabilize the exchange rate of their currencies within the prescribed range;

Within the prescribed exchange rate fluctuation, the currencies of member countries can float against the currencies of other member countries, and the exchange rate between the currencies of each member country is centered on the Deutsche mark.

At the ten-meter-long oval conference table, Shen Jiannan, Robert and John, as well as William, Andy Smith and Yu Zheng, core members of Capital One London, sat quietly in chairs, facing the panel of the projector.

William's secretary, Mary Snorl Hunt, dressed in a suited suit and holding a whip, talks about the basic concepts that complement the EC's exchange rate mechanism.

"The exchange rate of the currencies of the member countries sets a fixed central exchange rate, which allows the exchange rate to fluctuate within a certain range above and below the central exchange rate.

The aim is to mitigate currency fluctuations in Europe, so that companies can invest and trade without worrying that sharp exchange rate fluctuations will make their business models fall short.

For more than a decade, the mechanism has worked well, stabilizing the currency without drastic unification.

All acceding currencies allow exchange rates to fluctuate within a small range with each other, and if flexibility is not sufficient, a country can negotiate devaluation with its European partners. These rules offer some governments the possibility to use interest rates to manage the economic cycle, a system that balances the objectives of exchange rate stability and interest rate flexibility. ”

“......”

William's secretary is certainly not ugly, Mary, who is just twenty-two years old, is young and beautiful, with delicate facial features, beautiful curves and crisp voice, which makes people feel very comfortable both visually and audibly.

Her basic skills are also very solid, as a top student in the School of Economics at Cambridge University, it is not a piece of cake to talk about an exchange rate mechanism.

Soon, Mary Snorl Hunt finished explaining the basic concepts and glanced at the current big boss.

Shen Jiannan nodded in approval, turned around and asked the few people seated.

"What do you think about ERM? ”

Several people present looked at each other, except for William, who probably knew that he didn't understand what his boss meant for a while.

Shen Jiannan raised his eyebrows, took out a cigarette and lit it without any restraint.

The smoke flowed into the lungs along the breath, eroded in the body again and again, and when it swam in the body for a week, the second-hand smoke was sprayed to everyone present in a very unethical manner.

"So, let me put it another way, in the ERM exchange rate system, you think there is something wrong with it. ”

The guys present are all human spirits.

Savoring Shen Jiannan's words, he guessed the purpose of the meeting he had summoned everyone in the middle of the night.

Soon, someone spoke.

Andy Smith is a Swedish currency expert who has been affiliated with the Redend Hedge Fund for the past decade.

Today, he is an Investment Manager at Capital One.

"From the perspective of the exchange rate mechanism, the biggest problem is the communication between the member countries, and there is a certain gap in economic strength between the countries. ”

"But it's not a big problem, and central banks have a role to play to maintain this kind of exchange rate coordination. ”

“.......”

“.......”

Shen Jiannan was quite satisfied with Andy Smith's reaction, if he couldn't even see this basic problem, it would be better to raise a pig with an annual salary of $30,000 a Chinese New Year's Eve.

Taking another puff of his cigarette, Shen Jiannan pressed the cigarette butt and smiled.

"And what if central banks are unable to intervene in this exchange rate coordination?"

“......”

A pair of eyes, big eyes and small eyes, except for Robert John, who was still a little confused, William and Andy Smith couldn't help but swallow.

Shen Jiannan laughed so terrible.

Both are smart people, William, as the general manager of London, probably already has a guess, and Andy Smith, as a currency expert, is also keenly aware of something.

“OK。 I think you already know what I'm trying to do. At present, the merger of Germany has made a huge hole in this system, with the current strength of the mark, the pound and the lira are facing great depreciation pressure. Now, let's analyze how we can exploit this vulnerability to make a lot of money. ”

Boom!

Boom!

People are most afraid of associations.

Thinking of what Shen Jiannan had been letting him do, William and Andy Smith swallowed in unison.

"Boss. Are you trying to sell the UK?"

Syllable!

Shen Jiannan snapped his fingers and cast an approving look at Andy Smith without hesitation, being able to guess his purpose so quickly, the title of currency expert is not a white belt.

At the end of the seventies, the British economy fell from the world's factories to peat swamps due to the impact of the oil crisis, and with Margaret Thatcher's administration to promote privatization, the British economy temporarily escaped the downturn.

However, due to the process of privatization reform, a large number of state-owned assets were sold to the capital of other countries, and the market also shifted from the British mainland to the European market and the North American market, but the United States financial crisis broke out, the economy was in a downturn, and with the decline of the North American market, the British export industry was severely restricted, causing a large number of ordinary people to lose their jobs.

According to the latest statistical report from the Office for National Statistics, the GDP growth rate in the third quarter of 1991 deteriorated even worse than the zero growth in the second quarter, at minus 0.5%, the largest decline since 1990. According to the report, the annual GDP growth rate in the third quarter of the previous year was 0.3%, a 16-year low.

The data showed that in the first three quarters of this year, British industrial production fell by 0.72 quarter-on-quarter, of which the weakness in the manufacturing sector was the most obvious, with a quarter-on-quarter decline of 1.0, while industrial investment also fell by 5.41%, the largest decline in 23 years. Not only that, but the output of the services sector, which accounts for two-thirds of the UK's GDP, fell by 0.4% in the third quarter.

The European Exchange Rate Mechanism (EFEM) was developed by the European Economic Community in 1979 to limit the range of exchange rate fluctuations of 11 European currencies, with the original intention of maintaining exchange rate stability among national currencies. However, this exchange rate mechanism has a fatal weakness: it can only be maintained if countries coordinate economic policies and keep their fundamentals close.

If inflation in the UK is higher than in Germany, it will put pressure on the exchange rate mechanism, and the interest rate differential between the two countries will also affect the exchange rate mechanism.

So the problem is, with the development of the Internet, the scale of foreign exchange market transactions has reached astronomical literacy, and the ability of central banks to intervene in the national currency with tens of billions of dollars of foreign exchange reserves in the past has been greatly weakened.

Glancing at Andy Smith with interest, Shen Jiannan spoke.

"Congratulations, you got it right. ”

"But boss, that's the Bank of England. ”

Bank of England?

So what.