Читать книгу Financial Cold War. A View of Sino-US Relations from the Financial Markets онлайн

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An innovative product offering by a British bank also played a key role. Britain had devalued the pound by 30 percent in September 1949 under the weight of its balance of payments deficit but began loosening exchange controls that had been imposed at the outset of the war in the early 1950s, in line with the Bretton Woods objective of freer global trade. In 1954, restrictions on British banks operating in the forward exchange markets were lifted. When, in 1955, sterling interest rates were raised above US rates, a profitable opportunity opened up for arbitrage between sterling and dollar interest rates. Midland Bank, one of the major British clearing banks, began offering 1⅞ percent on 30-day dollar deposits, or ⅞ percent above the Regulation Q capped rate of one percent. It then sold the dollars in the spot marketssss1 and bought them back in the forward market for a premium of 2⅛ percent, giving Midland sterling funding at 4 percent (1⅞ percent plus 2⅛ percent) versus the prevailing Bank Rate of 4.5 percent.