Fast Currency Trades Feed Fears of a Crisis: U.S. Worries Speculators ...
ThereÛªs a growing worry among the Clinton administration, Federal Reserve officials and top Wall Street financiers that the international money markets could trigger a major financial crisis they might not he able to control.</br></br>The problem, as they see it, is the rise of what is called "hot money,Û a multitrillion-doUar pool of capital that races around the world's stock, bond and currency markets in search of higher returns each day.</br></br>In a worst-case scenario, those shifting tides of money could swiftly deepen any new government or global currency market crisis that might occur, effectively shutting down the system for handling financial transactions, such as billion-dollar currency trades, buying shares of stockÛÓeven cashing a check at the local supermarket.</br></br>In the past this threat was minimal because markets were smaller, governments did not have to respond to market pressures overnight and major central banks had more clout and resources relative to private currency traders.</br></br>For now, a solution to the problem is not in sight. Rather, there are efforts underway to at least make governments less vulnerable to this kind of large and instantaneous movement of money.