Foreign exchange (FX) is the world’s largest, most liquid and active marketplace that surprisingly lacks for the attention its size merits.
As to its significance, one day of FX trading beats average daily trading in global stock markets by 28 to 1.
According to the report “Navigating the waters of foreign exchange and international payments” published on 16 December 2014, the lack of visibility leads to intrinsic risks as exposure to currency fluctuations can make foreign exchange a dangerous blind spot. Companies participating in the global competition need a firm handle on currency markets. If treated wisely, FX can support liquidity, credit relationships, cash flow and healthy bottom lines. The report of The Economist Intelligence Unit explores the risks, challenges and opportunities of the FX market and highlights strategies experts use to manage this large and complex market.
BETTER FINANCE also would like to draw the attention to the opaque and unregulated nature of the currency market. It is the least taxed and extremely expensive for end users. Despite the gigantic size of the currency market, the majority of currency transactions are purely financial and executed by and for financial institutions. Notwithstanding that the currency market dwarfs any other financial market, it does not get enough attention from the regulators.
The full report can be downloaded from The Economist’s website.