As the so-called "borrowing and repaying", the currency borrowed by the five major investment banks must be repurchased in the same amount and type of currency after the expiration of the loan period in the future.

However, as the country's currency continues to strengthen in the international foreign exchange market, it will cost more money to buy back the same amount of the same currency, and the proceeds from selling the currency cannot make up for the funds paid to buy back the currency, which is often said to be "making ends meet".

That would mean that the operation to short the currency failed, and the five largest investment banks on Wall Street ended up losing money.

Therefore, for the five major investment banks on Wall Street, if they simply increase their holdings of a certain currency, they will definitely expose their risk positions.

As for whether they can make money by increasing their holdings of this currency, it can only depend on the sky, and no one can guarantee that they will make a steady profit or lose money, and if people with ulterior motives seize the opportunity to create strong market fluctuations, they may lose money to the bottom.

And because the scale of the five major investment banks on Wall Street is too large, in order to maximize investment returns, there are very close mortgage and pledge relationships between many investment products within the investment bank, and various investment products have both losses and prosperity.

Once there is a large fluctuation or loss of an investment product within the investment bank, it is easy to cause a series of chain reactions, and eventually lead to the collapse of the behemoth of the investment bank.

For example, the unprecedented subprime mortgage financial crisis that swept the world in 2008 was caused by the failure of CDS, a financial innovation product, which triggered a series of chain reactions within the five major investment banks on Wall Street, and eventually led to the collapse of the five major investment banks and the occurrence of the financial crisis.

Therefore, for the five major investment banks on Wall Street, investment risk control is absolutely the most important thing in their investment and operation.

Let's go back to the example of shorting a country's currency.

If the five major investment banks on Wall Street hold a considerable amount of Rothschild Bank shares, they can completely hide the exposed risk positions and avoid huge losses due to market fluctuations.

It's still the same example.

The five largest investment banks on Wall Street hold a large number of short positions in currencies, and if the global economic situation continues to improve, resulting in a sustained increase in currency values, the five major investment banks will face huge losses.

However, as the global economic situation continues to improve, the value of Rothschild Bank shares as "gold stocks" has also risen.

At the same time, as the economic situation gets better and better, the world's investment demand will also skyrocket, and in order to balance the new investment demand, the demand for Rothschild Bank shares by major investment banks and investment institutions will also skyrocket, so the stock price of Rothschild Bank will also increase further.

Therefore, under the influence of the superposition of the above two factors, the appreciation of Rothschild Bank stocks is greater than the rate of currency appreciation.

At that time, the five major investment banks on Wall Street will be able to sell the soaring Rothschild Bank shares and obtain higher returns, so as to make up for the shortfall caused by the failure to short the currency.

Therefore, because the five major investment banks on Wall Street have Rothschild Bank shares as a hedge, they play a good role in reducing the risk of shorting currencies.

Seeing this, some people will definitely ask, what if it is the other way around?

In case the five major investment banks on Wall Street "bet" on the right direction of market fluctuations, the global economic situation is deteriorating, and the value of the increased currency continues to fall, it means that the five major investment banks on Wall Street have successfully shorted currencies and obtained short-selling gains.

Will the Rothschild Bank shares held by the five major investment banks on Wall Street pull down the returns of successful shorting?

If anyone can really ask this question, then congratulations, it means that everyone really understands the difference between hedge fund risk hedging and investment bank risk hedging.

To put it simply, hedge funds in the traditional sense also pay a lot of attention to the risk hedging of portfolios, which used to be the real origin of the name "hedge fund".

But in general, the hedge fund risk hedging principle is to set up two securities in the portfolio that move in the opposite direction of a certain market factor (such as interest rates).

Regardless of which direction the market factor moves, the two securities in the portfolio will always rise and fall, but by different degrees.

If the portfolio is selected reasonably, it can always allow the hedge fund to make a certain profit, but it can avoid most of the market risk.

But this is not the case with risk hedging in investment banks.

Then, to answer the question just now, if the five major investment banks on Wall Street bet on the risk of market volatility, the global economic situation continues to deteriorate, and the value of the increased currency continues to fall, the five major investment banks will successfully short the currency and obtain large returns.

At the same time, Rothschild Bank's stock is known as "gold stock" because of its strong stability, and investors are often more willing to invest their funds in Rothschild Bank stock to maintain their value when the global economic and financial crisis and other economic conditions are bad.

By that time, Rothschild's stock price would often rise instead of falling, so even in the face of a deterioration in the global economy, the five largest investment banks on Wall Street would still be able to make a fortune by holding Rothschild Bank's shares.

In this way, the five major investment banks on Wall Street can not only get the benefits of shorting the currency, but also get the benefits of holding Rothschild Bank stocks, and even more!

Therefore, if the five major investment banks on Wall Street bet on the right direction of market fluctuations, Rothschild Bank shares can make the five major investment banks "happy".

If the bet is wrong in the direction of market fluctuations, Rothschild Bank shares can not only guarantee the five major investment banks, but also make the five major investment banks make a small profit.

Rothschild Bank stocks can not only reduce the investment risk of the portfolio, but also ensure the income of investment institutions in drought and flood, who does not love such stocks?

In fact, this is the fundamental reason why Rothschild Bank stock is so favored by Wall Street investment banks and investment institutions around the world.

Once you understand the principle of hedging between Rothschild Bank shares and holding huge short positions in currencies, it is easy to understand why Mr. Shamal and others are so angry at this moment.

Just now, under Qiao Tianyu's erroneous leadership, the shares of Rothschild Bank held by the five major investment banks on Wall Street were sold out.

Without Rothschild's risk hedging function, the huge currency short positions held by the five major investment banks were completely exposed.