The fear of central banks with large balance sheets is a powerful political force, one that economists don't really appreciate. The rational thing would be to keep the peg (or even better, target inflation or NGDP) but an unfortunate majority of politicians and voters are fearful of "printing money". Just as central banks around the world keep making the mistake of allowing falls in the inflation rate during a recession, economists keep making the mistake of assuming the next central bank will listen to them.
No-one, and I mean [b]no-one[/b] thought the Peg would be kept.
The issue was how it was broken, nothing more.
http://www.ft.com/cms/s/8084cc9a-9cc5-11e4-971b-00144feabdc0...
http://www.telegraph.co.uk/finance/economics/11353686/QE-or-...
http://www.telegraph.co.uk/finance/economics/11321355/Mario-...
Europe announcing QE on the scale of the US markets lead directly the CHF moves.
My comment below that showed the media reporting of this is now "down-voted".
>>Out.
Funny. HN - the new Reddit.
#It's not a war
Yes, yes it is. Has been since the 70's. Anyone who tells you that currency markets aren't a function of State Power doesn't know what CB's do[1][2]. [The public side to this story is that the IMF wasn't informed prior to the move - work out why].
#Losses
Heavily leveraged FOREX companies (aka day babies) were taken to the cleaners, and some banks / funds who had positions lost out. Look at the # of positions that were closed out for the real story.
#Russia
It's interesting to note who holds what in Swiss Banks, and in CHF. Just a thought[3][4]
#HappyCamperFunTimes
Rumor has it that HFTs are going to be heavily ganked very soon, to the tune of 60% through-flow. You didn't hear that here.
[1]http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b... [2]http://www.cfr.org/about/membership/roster.html?letter=S [3]http://www.theguardian.com/world/2010/dec/08/wikileaks-us-ru... [4]http://itar-tass.com/en/economy/769344
Ganked in the "stolen" sense, or in the "outnumbered" sense? Neither makes sense to me. I'm not hearing this here, but .. can you elaborate?
a) With Legal rules made against a majority of HFT processes (edited - pathways is probably a weird weft for HN)
b) With aggressive >contra algos employed to prevent certain HFT processes working
c) With bandwidth / latency stingrays employed
It's happening as we speak: a lot of players high up in the game are tired of HFTs.
Note: this is all rumor, and plausible deniability has been engaged.
You didn't hear it here, but it's gonna happen.
Aggressive control of HFT in the market is already on the books. Will it save the markets in the next phase?
Nope, but it's on the books. Hilarious that no-one here is connected enough to know this.
Be Seeing You.
Though, I'd be surprised if any law gets passed and enforced against HFT as long as Goldman is HFTing. They have too much klaut to make that happen. Once they stop profiting from HFT - everything goes
What are the relevant regulations?
I'm confused about your assertion "a lot of players high up..."; GS is quite high up there, and they're very active in HFT, as are many others, so that seems at odds with your assertion that powerful players are "tired of HFTs" (unless they are playing only to essentially defend their more strategic interests). Any more powerful than them, and I'm thinking executive political participants, but I'm hard-pressed to think of any of them who could actually put something actionable into place would care about HFTs. Unless the volatility induced by HFTs during certain market scenarios is presenting a problematic obstacle for achieving specific nation-state strategic goals, I can't see how national-level political actors would involve themselves with clamping down on HFT activity?
Anyways, fascinating food for thought, thanks for bringing this up.
[1] http://www.marketwatch.com/story/money-managers-led-by-fidel...
[2] Paywalled: http://www.wsj.com/articles/money-managers-led-by-fidelity-c...
I think it was expected from the outset that this would be a temporary peg/floor. There has been recent hints on this.
# It's not a war
Also, this isn't a 'currency war' in anyway. If there is any adjustment that other countries typically dislike it's devaluations, since that'll make their currency relatively more expensive, causing a short-term disadvantage for exporters [whom often line politicians pockets]. This was the opposite, a revaluation (or correction).
Inconsistently people called this a 'currency war' when the floor was introduced too[1].
# Losses
Sure, a few companies were bankrupted because of risky speculation, that happens all the time. It was foolish to believe that this floor would exist indefinitely, and thus any position making that assumption would obviously be very risky.
Interestingly people lost money[2] when the floor was introduced only 3 years ago. Sometimes memory is short.
[1] http://citywire.co.uk/money/have-swiss-won-currency-war-with...
[2] http://www.dailymail.co.uk/news/article-2037632/Kweku-Adobol...