In this speech, Philippe Lintern reflects on the lessons learnt from the history of the FX market. He discusses the upcoming review of the FX Global Code and the importance for market-wide adoption of the updated Code. He also highlights the need for action to mitigate FX settlement risk.
Speech
Introduction
‘Once more unto the breach, dear friends, once more;
Or close the wall up with our English dead!
In peace there's nothing so becomes a man,
As modest stillness and humility;
But when the blast of war blows in our ears,
Then imitate the action of the tiger’
This speech from Shakespeare’s Henry V seems apt to describe the history of the Foreign Exchange (FX) market. The FX market as we know it, was born from a crisis, namely the collapse of the Bretton Woods System in 1971 and the end of the dollar peg for many currencies. Thereafter, the FX market has prevailed over many crises, interspersed by calmer times.
The story of FX is one of huge success. The FX market has grown hand in hand with the global economy and has become the largest and most liquid market in the world, with over $7.5 trillion of FX turnover every dayfootnote[1] (see Chart 1). London remains the heart of this market, representing close to 40% of the global turnoverfootnote[2]. The FX market underpins the global economy by enabling the international flow of goods, services, and capital. It provides the infrastructure for households, businesses, and financial market participants to transact across international markets confidently, efficiently, and at fair market prices.
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