Zhong Shi left the trading room tiredly, stood outside the window and moved his sore hands and feet, looking at the bright lights of Victoria Harbour not far away, a pride inexplicably rose in his heart, and a faint smile appeared on the corner of his mouth.

Sweden, the home of the Nobel Prize, is a model of the Shijie welfare state, with the largest number of multinational companies (in proportion to the population) on Shijie, and the birth of such world-renowned brands as Ericsson, Volvo Cars, IKEA, Koenigsegg Sports Cars, etc.

However, Sweden's economy has not been very good in recent years, first the Social Democrats who came to power in the 80s carried out tax reforms, and the tax deduction of interest expenses is now less than half of the interest expenses, which has reduced the borrowing cost of borrowers by half, and at the same time greatly increased the tax on investment with loans from financial institutions, so that the cost of borrowing has been greatly reduced.

In this case, the real estate and securities markets became the preferred choice for investment, and with it, a huge bubble was created. But by '89, this vanity began to shatter, and with the recession of the Shijie economy, the Swedish government's current account deficit began to grow rapidly.

Against this backdrop, the four-party coalition government at that time untimely introduced a new reform plan, abolishing the direct provident fund, which was hated by the capital, abolishing a series of taxes such as stock transaction tax, reducing inheritance tax, energy tax, and employer tax, privatizing 34 large and medium-sized state-owned enterprises, and opening up the aviation, media, telecommunications, education, and automobile fields to the outside world and introducing external competition.

These measures reduce the tax deduction for interest expenses and abolish the different tax arrangements for different types of investments in the old tax system. As a result, the rapid rise in the real interest rate on taxes has increased the borrowing cost of borrowers, which has led to the market's inverse expectations for real estate investment and stock market investment, which has led to the bursting of real estate and stock bubbles, and the economy has entered a stage of full-scale contraction.

After successfully defeating Britain and Italy, hedge funds launched a non-stop attack on France, another important country in the European monetary system, whose share in the ECU (European Currency Unit) exceeded ten percent, making it the third largest currency after the mark and the pound, becoming the second largest after the exit of the British pound.

If the European monetary system is a giant, so to speak. Then the Deutsche Mark and the French Franc are the two legs of this giant. If the French franc were to fall along with the British pound, the European monetary system would be dead in name.

On September 16, hedge funds and commercial banks quickly turned their guns on the French franc after defeating the Bank of England and the Central Bank of Italy in the foreign exchange market. Two days later, the exchange rate of the franc against the mark fell to the minimum set by the European exchange rate system. As a result, the Banque de France, the central bank of France, was forced to close its doors for half an hour.

Two days after the weekend. Speculative funds, having flattened the previously sold pounds in the market, raised more ammunition and began to attack the French franc more violently again. On the day of September 21st. The Banque de France was forced to use 51 billion francs to temporarily halt the sell-off of francs in the foreign exchange market.

Generally speaking, the daily transaction volume of a country's currency in the foreign exchange market is at most hundreds of millions or billions, and a large part of these transactions are exchanged by the foreign exchange departments of commercial banks and settled by foreign trade enterprises, such as buying 50 billion francs a day, which is basically unprecedented, and these funds basically accounted for half of all the foreign exchange reserves of the Bank of France at that time.

After the craziest day of the attack, France finally got a chance to breathe, and after receiving support from other central banks in Europe, the French government also announced an interest rate hike on the 23rd to attract the inflow of external funds, and finally repelled the first attack of international funds.

Other countries whose currencies are pegged to the ECU and whose capital accounts are open (meaning their currencies are freely convertible) are the next round of international funding targets. Unlike France, they are not part of the European monetary system, which means that these countries are essentially alone.

Among them, Sweden, whose economic situation is particularly bad, has been targeted by international funds!

In 1989, Sweden opened its financial markets to free access to capital, which gave international capital the possibility of speculation. The krona, as the currency of Sweden, was unilaterally linked to the ECU in 91, which means that when the exchange rate of the krona falls to a certain extent, the central bank of Sweden must intervene in the foreign exchange market.

Although Zhong Shi made an over-the-counter option to short Swedish krona, it was difficult for him to believe that the contract would be executed normally, you must know that there are about 15 large commercial banks in Sweden, and now after the outbreak of the financial crisis, it is not known how many commercial banks will go bankrupt because of the sharp rise in non-performing assets, in fact, after the financial crisis, there are only four commercial banks left in Sweden, including Nordic Swedish Commercial Bank and Swedish Commercial Bank.

Fortunately, Zhong Shi made a guarantee, and if this contract is not fulfilled, then his counterparty will become HSBC. It's just that after this order is settled, will HSBC, which has received tens of millions of dollars in guarantee fees, fire a large number of employees in private banks, because according to Zhongshi's memory, the krona once fell by more than 20% after the Swedish government finally abandoned the link between the krona and the ECU.

If history hadn't changed, HSBC would have lost more than $600 million on this option, and HSBC's expected earnings would have been significantly lower in the quarter, and the stock price would have fallen.

As a result, a large number of employees of private banks, including Lu Fei, as well as HSBC's internal risk control department and foreign exchange trading department, will be laid off, which will also become the largest loss in Shijie's financial history.

Bell Stone couldn't take care of so much anymore, these people in the private bank were notoriously forgetful, and when they helped him design the Swiss franc, the temporary increase in the exchange rate because of the Swiss franc's skyrocketing in the market was enough to make Bell Stone completely chill them.

After he finished dealing with the mainland, he immediately rushed back to Hong Kong, and this time he reformulated his operation strategy to further profit in the foreign exchange market.

He first said that Liao Chengde pledged all the shares of the trading company in exchange for a three-month low-interest loan of 50 million US dollars, which was borrowed from the Bank of Japan, because the loan interest rate of the Bank of Japan at that time was 2.525% (annual interest rate, the data is half of the annual deposit rate plus the legal interest rate spread of 0.875), which is much lower than the three-month loan rate of 3.74% in Hong Kong.

Then, he used the funds invested in the British government bond and stock market as a guarantee, borrowed $1.5 billion at the same interest, plus Andrew's entire net worth of 50 million in the past few years, a total of $1.6 billion was invested in the foreign exchange market.

Andrew is well aware that this operation of foreign exchange currency is a sure-fire situation. For example, in the foreign exchange market, commercial banks tend to buy a currency with a US dollar exchange rate of 4.5 at a price of 4.4998 and then sell it at a price of 4.5002 to earn the difference.

But none of this is a big problem, because if the SEK holds, at most they will buy back the same share of the krona in a similar way, and once the krona starts to fall, then it will be the beginning of their profits.

When Zhong Shi gathered Liao Chengde and Andrew together and told him what he had done in Europe, the two were stunned, they were both insiders, and naturally knew that the recent events in the Shijie financial market, especially the news of the defeat of the Bank of England, shocked the whole of Hong Kong. As the suzerain, Hong Kong people have more or less special feelings for the British, which is thousands of miles away, so there is a rather pessimistic mood in society.

Liao Chengde never expected that Zhong Shi was a part of the international tour capital mentioned in the newspaper, Zhong Shi did not specifically say how much share he had in the market and how much he earned, but he knew Zhong Shi's ability to absorb gold in the Singapore market before, so he happily joined after a little consideration.

Compared with Liao Chengde, Andrew was even more surprised, he followed Zhong Shi all the way to Europe on his last trip to Europe, and he still vaguely remembers that on September 16, Zhong Shi was extremely busy, frequently wandering through several different trading departments, and made a profit of more than 100 million pounds in one day. But he never expected that Zhong Shi was still shorting the pound, and then took the opportunity of the depreciation of the pound to make up for his position. Now that he thinks about it, I'm afraid that Zhongshi will make more money in that invisible market.

"How the hell does this work? Just in exchange for a profit? Seeing the $1.6 billion in funds into HSBC's foreign exchange account, Liao Chengde still couldn't believe it. In his opinion, foreign exchange is nothing more than exchanging currencies from one currency to another, how can this make money!

"Just look closely!" Zhong Shi didn't bother to explain, glanced at Liao Xiaohua, who was silent, and operated on the computer by himself.

Liao Xiaohua was very eye-catching now, and hurriedly walked towards Liao Chengde's side, and began to pour confused soup into Liao Chengde with very professional words such as "European exchange rate system" and "fixed exchange rate system".

At the same time, an economic paper entitled "Short-Term Capital Flows and Currency Crises" was published in The Economist magazine. Published by Zhong. The Economist magazine has a pivotal position in the international economics community, and this paper analyzes the crisis of the pound from various perspectives such as the economy, exchange rates, foreign exchange derivatives, and hedge funds, so it was soon published in The Economist, headquartered in London, this semi-academic and half-applied paper. (To be continued......)