Tag Archives: Networks

Is sterling ever a fashionable currency?

Jihyoung Yi.

Despite the fact that the US dollar and the euro are the most traded currencies in terms of shares of average daily turnover (2013, BIS), my analysis suggests that foreign exchange rate (FX) market trends are usually driven by other currencies.  Most notably, ‘commodity’ currencies (such as the Australian dollar and Mexican peso) and ‘carry-trade’ currencies (such as the Swiss franc and Japanese yen) tend to be the main drivers. In contrast, sterling typically does not often drive currency movements – FX strategists often consider that it is rare for sterling to be ‘the story’ amongst the speculative community in the FX market.  But this is not always the case.  This blog post zooms in on a selection of sub-periods to show when particular currencies, including sterling, became ‘focal’.

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Filed under Currency, Financial Markets, New Methodologies

Extracting insight from complexity

John Hill and Jamie Coen.

The financial system is complex and highly interconnected.  Indeed, interactions between agents are key to its functioning.  But these interconnections have the potential to turn small shocks into systemic crises.  Understanding the complex nature of these interconnections is important, but can also be difficult. In this post we introduce new tools designed to analyse the financial network and help analysts build a better understanding of risks posed by interconnectedness.

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Filed under Financial Stability, Macroprudential Regulation, New Methodologies