The Money Changers

A Guided Tour through Global Currency Markets

Robert G. Williams


A guide to the world's money markets and how they work. This book gives the reader a picture of the geographical and structural organization of global currency markets and the people who manipulate them. It presents a picture of a volatile, and rapidly evolving structure which helps to decipher the causes of yet unforeseen global financial events.
At almost $2 trillion per day in trades, currency markets vitally link the world together. Yet few people understand how they work and why they are prone to instability and bouts of panic. This book takes the reader behind the scenes on a tour of the places, the machines, the circuitry and the people involved in moving world money.

This journey begins as a traveler removes foreign currency from an ATM machine in Istanbul. The author guides us from the periphery of the market into its neural centers in financial hubs such as London and New York. Currency traders, market analysts, money managers and payments systems architects show their workplaces and reveal their day-to-day experiences in this unpredictable and rapidly evolving world.

The experts interviewed may use unfamiliar terms, but the logical progression of the chapters and participants' stories told in workplace settings bring abstract concepts down to earth. After completing the tour, the reader will have a clear picture of the geographical and structural organization of global currency markets and the people who run them. This vision of a volatile, evolving structure will provide a useful framework for deciphering the complex causes of yet unforeseen financial events.

Table of Contents

  • Introduction: Encounter with a Moneychanger
  • 1. A Glance at Foreign Exchange at Breakfast
  • 2. A Visit to the Local Bank: What Do Money Changers Buy and Sell?
  • 3. How Do Money Changers Arrange Deals?
  • 4. Who Are the Actors in the World's Biggest Market?
  • 5. Where Deals are Made: Historical Geography of Money Changer Enclaves
  • Why Do Money Changers Cluster Where They Do?
  • Paradox of Clustering in a Computer-linked World
  • 6. Professor Smith Gets FX'd in Tokyo: Could He Have Profited from a Currency Forecast?
  • 7. Inside the Trading Room: Philosophies behind Trading Strategies
  • Vision No. 1: It's All Supply and Demand
  • Vision No. 2 : It's All Fundamentals
  • Vision No. 3: It's All Technical
  • 8. Behind the Fish Tank: What Causes Rates to Change?
  • 9. How Currencies are Delivered: Snapshot of an Evolving System
  • A Visit with a Payments Systems Expert
  • Appendix to Chapter 9: Diagrammatic Notes on Currency Delivery Channels
  • 10. The Big Apple: Electronic Dollar Deliveries through CHIPS
  • 11. Time to Settle Up: CHIPS Closes the International Dollar Day at the New York Fed 4:30-5:00 pm
  • CHIPS Upgrades to Real Time Final Settlement 2001
  • Finally, a Delivery System Safe from Foreign Exchange Settlement Risk:
  • Continuous Linked Settlement Bank begins in 2002
  • Lessons of September 11, 2001 for Global Payments
  • 12. In the City of London after the Russian Default: Anatomy of Currency Storms of the 1990s?
  • 13. The Euro in its Infancy
  • Prologue
  • The Potential of the Euro as a World Currency The Euro-Revolution in Stocks and Bonds
  • The Transition of the Real Economy to Euro
  • 14. Doubts about the Euro and the new Central Bank
  • A European Central Banker Waits on the Sidelines
  • Doubts about TARGET, the Official Euro Payments System
  • Reflections on the Future of the World Monetary System
  • Wrap-up Session with Walter Blass
  • Update Appendix: Euro Developments after the 1999 London Interviews
  • 15. Testing the Dollar's Hegemony: Will the Adjustments be Smooth?
  • Source of the Dollar Doubts: How long will Foreigners Finance US Overspending?
  • Dollar Testing Episodes and the Evolution of Market Stories
  • Episode 1: Spring and Summer 2002
  • Episode 2: The Buildup to War
  • Episode 3: Fall of 2003
  • Episode 4: 2004 Presidential Elections and their Aftermath
  • Relief for the Dollar: Spring and Summer 2005
  • A Smooth or Turbulent Adjustment: Greenspan vs Volcker
  • The Run on the Dollar in the Late 1970s
  • The Political Economy of Sterling's Decline as Global Currency
  • Long-run Lessons for the Dollar's Loss of Hegemony
  • A Hopeful Conclusion


This is a nontechnical exploration into the mechanics of the foreign exchange market, which Williams (Guilford College) nicely motivates by starting with an ordinary retail transaction--an ATM withdrawal of local currency in a foreign country--and tracing it through the wholesale foreign exchange markets to show what actually happens. In doing so, the author provides an intuitive way to explore the most important and arguably the most efficient market in the world, which makes international trade, investment, and financial transfers possible. Individual chapters deal with the nature of spot and forward foreign exchange transactions; how deals get arranged, consummated, and settled; who the major players are; the nature of trading strategies; the sources of exchange rate volatility; the sources of market shocks; and the comparative roles of the euro and the dollar. The discussion is up-to-date, and the use of dialogue makes the book very accessible to the intelligent but uninformed reader. Summing Up: Highly recommended. General readers; all levels of undergraduates.
Ingo Walter, Seymour Milstein Professor of Finance, Corporate Governance and Ethics at the Stern School of Business, New York University

'Currency trade is made accessible through the recounting of a series of personal experiences of the author, and professional encounters ranging from bank managers to backroom traders...endeavours to bring abstract concepts of currency exchange down to earth and portray in simple terms the geographical and structural organisations of global currency.'
Oxfam Reviews of Journals

'Ambitious and informative...a colourful history of international finance.'
Tribune, November 2006


Publication Date: 30 May 2006
304 pages

Product ISBNs: Paperback: 9781842776957
eBook ePub: 9781848137363
eBook PDF: 9781848130739
eBook Kindle: 9781780328362
Library Edition: 9781842776940

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