Sterling has historically punched above its weight in the foreign exchange market due to the legacy of the British Empire, North Sea oil, the Thatcher-era privatisations and London's role as the epicentre of the Euromarkets
, derivatives and asset securitisation.
The situation became alarming in 1974 when Franklin had made heavy losses amounting to $63.6 million, the collapse of the Herstatt Bank sent shock waves through the international banking system especially in the foreign exchange markets and the Euromarkets
. This is known as the financial instability of the 1970s.
The City of London has hardly suffered from being outside the eurozone, as financial markets, especially the Euromarkets
and foreign exchange markets, are global rather than merely European.
But the 1970s were characterized by deep-going disruption of the economic environment and the transformation of the traditional system: the abandoning of fixed exchange rates, energy crises, a steep increase in inflation, interest rate volatility, the growth of the euromarkets
, and so on.
In the 1970s financial markets were developed, with the oil crisis and the masses of dollars mobilized oil price hikes and euromarkets
deposits formed with petrodollars.
Bank Rossiya's hawkish, anti inflation policies in the Moscow money markets, a reversal of capital flight, the successful $5 billion placement of the Kremlin's stake in Sberbank in the Euromarkets
, the new law to enable rouble denominated OFZ government debt to be cleared in Euroclear/Clearstream, the 2013 budget and the rise in hard currency reserves to $528 billion have all led to a sustained global bid for the Russian rouble, a macro scenario I had outlined in successive columns.
The new bonds were issued via OMV s EUR 4 bn Euro Medium Term Note Program (EMTN) a funding program that allows OMV to issue debt in the Euromarkets
on a regular and continuous basis and have denominations of EUR 100,000.
Pundits proclaimed the end of the real estate bubble even as airports were empty, expats were sent home in droves, unfinished towers silhouetted the skylines and bankers morphed into Uncle Scrooge, unwilling and unable to lend at home since they could no longer borrow hot money in the Euromarkets
A financial global private system is in course of becoming a structure, including the network of multinationals, commercial and investment banks, Euromarkets
, markets of derived financial products, the large financial world markets, which show generally the process of internatio-nalization and globalization of international commercial transactions with all the consequences for the participants at the stages.
The breakdown of Bretton Woods in the early 1970s, which provided the impetus to floating exchange rates, coupled with the recycling of petrodollars through the Euromarkets
beginning with the first OPEC (Organization of Petroleum Exporting Countries) oil embargoes of the mid 1970s, provided institutions with the instability of markets and the ready supply of funds to introduce a wide range of international banking products and services.
The process of financial deregulation in the United States and the United Kingdom and the spread of euromarkets
make new sources of financing available.
For example, the United States was unable to convince European and especially British regulators of the wisdom of closing down the Euromarkets
in the mid-1970s after U.S.