2/ It was basically started as interest rate arbitrage. Money flowed from New York to London due to the yields on UK treasuries. This stemmed from the inflow of US dollars caused by the higher rates.
4/ This was long before entities such as BIS started to notice what was taking place. The banks were able to overcome liquidity issued caused by Bretton Woods which was designed to limit capital flows.
2/ It was basically started as interest rate arbitrage. Money flowed from New York to London due to the yields on UK treasuries. This stemmed from the inflow of US dollars caused by the higher rates.
3/ Midland Bank in London started the process by borrowing dollars and buying sterling. This set off a process that other banks followed.
4/ This was long before entities such as BIS started to notice what was taking place. The banks were able to overcome liquidity issued caused by Bretton Woods which was designed to limit capital flows.
5/ This led to a system outside the realm of central banks and governments. It quickly expanded and took over financing of global trade.
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