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Speculative Attack
In economics, a speculative attack is a precipitous selling of untrustworthy assets by previously inactive speculators and the corresponding acquisition of some valuable assets (currencies, gold). The first model of a speculative attack was contained in a 1975 discussion paper on the gold market by Stephen Salant and Dale Henderson at the Federal Reserve Board. Paul Krugman, who visited the Board as a graduate student intern, soon adapted their mechanism to explain speculative attacks in the foreign exchange market.Paul Krugman (1979), 'A model of balance-of-payments crises'. ''Journal of Money, Credit, and Banking'' 11, pp. 311-25. There are now many hundreds of journal articles on financial speculative attacks, which are typically grouped into three categories: first, second, and third generation models. Salant has continued to explore real speculative attacks in a series of six articles. How it works A speculative attack in the foreign exchange market is the massive and sudde ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on glossary of economics, these elements. Other broad distinctions within economics include those between positive economics, desc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Short (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional "long" position, where the investor will profit if the value of the asset rises. There are a number of ways of achieving a short position. The most fundamental method is "physical" selling short or short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender. If the price has fallen in the meantime, the investor will have made a profit equal to the difference. Conversely, if the price has risen then the investor will bear a loss. The short seller must usually pay a fee to borrow the securities (charged at a particular rate over time, similar to an interest payment), and reimburse the lender for any cash returns such as dividends that were due ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tobin Tax
A Tobin tax was originally defined as a tax on all spot conversions of one currency into another. It was suggested by James Tobin, an economist who won the Nobel Memorial Prize in Economic Sciences. Tobin's tax was originally intended to penalize short-term financial round-trip excursions into another currency. By the late 1990s, the term Tobin tax was being applied to all forms of short term transaction taxation, whether across currencies or not. The concept of the Tobin tax is being picked up by various tax proposals currently being discussed, amongst them the European Union Financial Transaction Tax as well as the Robin Hood tax. Tobin's original proposal Tobin suggested his currency transaction tax in 1972 in his Janeway Lectures at Princeton, shortly after the Bretton Woods system of monetary management ended in 1971. Prior to 1971, one of the chief features of the Bretton Woods system was an obligation for each country to adopt a monetary policy that maintained the e ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Speculation
In finance, speculation is the purchase of an asset (a commodity, good (economics), goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline in value.) Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. In principle, speculation can involve any tradable good or financial instrument. Speculators are particularly common in the markets for stocks, bond (finance), bonds, commodity futures, currency, currencies, fine art, collectibles, real estate, and derivative (finance), derivatives. Speculators play one of four primary roles in financial markets, along with hedge (finance), hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageus who seek to profit from situations where Fungibility, fungible instruments trade at different prices in different market segments, and investors who s ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Spahn Tax
A Spahn tax is a type of currency transaction tax that is meant to be used for the purpose of controlling exchange-rate volatility. This idea was proposed by Paul Bernd Spahn in 1995. Early history The initial idea for a currency transaction tax is attributed to James Tobin in 1972, a concept now known as a Tobin tax. On June 16, 1995. Spahn, in his analysis of the original idea, concluded that the concept was not viable and suggested an alternative solution to the problem of managing exchange-rate volatility. Concept According to Spahn, "Analysis has shown that the Tobin tax as originally proposed is not viable and should be laid aside for good." Furthermore, he believes that "it is virtually impossible to distinguish between normal liquidity trading and speculative 'noise' trading. If the tax is generally applied at high rates, it will severely impair financial operations and create international liquidity problems, especially if derivatives are taxed as well. A lower tax ra ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Transaction Tax
A financial transaction tax (FTT) is a levy on a specific type of financial transaction for a particular purpose. The tax has been most commonly associated with the financial sector for transactions involving intangible property rather than real property. It is not usually considered to include consumption taxes paid by consumers. A transaction tax is levied on specific transactions designated as taxable rather than on any other attributes of financial institutions. If an institution is never a party to a taxable transaction, then no transaction tax will be levied from it. If an institution carries out one such transaction, then it will be levied the tax for the one transaction. This tax narrower in scope than a financial activities tax (FAT), and is not directly an industry or sector tax like a Financial stability contribution (FSC), or "bank tax", for example. These distinctions are important in discussions about the utility of financial transaction tax as a tool to selectivel ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Currency Crisis
A currency crisis is a type of financial crisis, and is often associated with a real economic crisis. A currency crisis raises the probability of a banking crisis or a default crisis. During a currency crisis the value of foreign denominated debt will rise drastically relative to the declining value of the home currency. Generally doubt exists as to whether a country's central bank has sufficient foreign exchange reserves to maintain the country's fixed exchange rate, if it has any. The crisis is often accompanied by a speculative attack in the foreign exchange market. A currency crisis results from chronic balance of payments deficits, and thus is also called a balance of payments crisis. Often such a crisis culminates in a devaluation of the currency. Financial institutions and the government will struggle to meet debt obligations and economic crisis may ensue. Causation also runs the other way. The probability of a currency crisis rises when a country is experiencing a banking ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Currency Transaction Tax
A currency transaction tax is a tax placed on the use of currency for various types of transactions. The tax is associated with the financial sector and is a type of financial transaction tax, as opposed to a consumption tax paid by consumers, though the tax may be passed on by the financial institution to the customer. Types of currency transaction taxes Currency transaction taxes have been proposed as taxes on domestic currency usage as part of the automated payment transaction (APT) tax and on international currency transactions, the Tobin tax and the Spahn tax. APT tax The automated payment transaction (APT) tax was first proposed in Buenos Aires at the International Institute of Public Finance Conference by Edgar L. Feige in 1989 and an extended version of the proposal appeared in Economic Policy in 2000. The APT tax proposal is a generalization of the Keynes tax and the Tobin tax. The APT tax consists of a small flat tax levied on all transactions. The tax is automatica ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been described as a '' sui generis'' political entity (without precedent or comparison) combining the characteristics of both a federation and a confederation. Containing 5.8per cent of the world population in 2020, the EU generated a nominal gross domestic product (GDP) of around trillion in 2021, constituting approximately 18per cent of global nominal GDP. Additionally, all EU states but Bulgaria have a very high Human Development Index according to the United Nations Development Programme. Its cornerstone, the Customs Union, paved the way to establishing an internal single market based on standardised legal framework and legislation that applies in all member states in those matters, and only those matters, where the states have agreed to act ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Exchange Rate Mechanism
The European Exchange Rate Mechanism (ERM II) is a system introduced by the European Economic Community on 1 January 1999 alongside the introduction of a single currency, the euro (replacing ERM 1 and the euro's predecessor, the ECU) as part of the European Monetary System (EMS), to reduce exchange rate variability and achieve monetary stability in Europe. After the adoption of the euro, policy changed to linking currencies of EU countries outside the eurozone to the euro (having the common currency as a central point). The goal was to improve the stability of those currencies, as well as to gain an evaluation mechanism for potential eurozone members. As of July 2021, three currencies participate in ERM II: the Danish krone, the Croatian kuna and the Bulgarian lev. Intent and operation of the ERM II The ERM is based on the concept of fixed currency exchange rate margins, but with exchange rates variable within those margins. This is also known as a semi-pegged system. Be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Pound Sterling
Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and the word "pound" is also used to refer to the British currency generally, often qualified in international contexts as the British pound or the pound sterling. Sterling is the world's oldest currency that is still in use and that has been in continuous use since its inception. It is currently the fourth most-traded currency in the foreign exchange market, after the United States dollar, the euro, and the Japanese yen. Together with those three currencies and Renminbi, it forms the basket of currencies which calculate the value of IMF special drawing rights. As of mid-2021, sterling is also the fourth most-held reserve currency in global reserves. The Bank of England is the central bank for sterling, issuing its own banknotes, and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cornering The Market
In finance, cornering the market consists of obtaining sufficient control of a particular stock, commodity, or other asset in an attempt to manipulate the market price. One definition of cornering a market is "having the greatest market share in a particular industry without having a monopoly". Companies that have cornered their markets have usually done so in an attempt to gain greater leeway in their decisions; for example, they may desire to charge higher prices for their products without fears of losing too much business. The cornerer hopes to gain control of enough of the supply of the commodity to be able to set the price for it. Strategy and risks Cornering a market can be attempted through several mechanisms. The most direct strategy is to buy a large percentage of the available commodity offered for sale in some spot market and hoard it. With the advent of futures trading, a cornerer may buy a large number of futures contracts on a commodity and then sell them at a profi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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