Word: dollarization
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Dates: during 1980-1989
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...player in the drive to bring the highflying U.S. dollar down to earth, Fred Springborn starts his day early and ends it late. Arriving at his ^ cramped Treasury Department office at about 6 a.m., the foreign-exchange specialist scans a Reuters video monitor through bleary eyes, checking the latest U.S. dollar prices from Bonn to Bangkok. After conferring by phone with colleagues at the Federal Reserve Bank of New York, Springborn heads down two flights of stairs to brief his boss, Treasury Secretary James Baker, who normally arrives before 7:30. In consultation with Federal Reserve Chairman Paul Volcker...
Springborn has been an early riser for years, but there is now special urgency to his work as director of the Treasury's office of foreign-exchange operations. Since last week's meeting of finance ministers from the five largest industrial democracies, reining in the dollar has become a matter of passionate U.S. concern. Unlike stocks, bonds or even pork bellies, currencies are not traded in one or two large buildings in a few major cities. The foreign-exchange market is a worldwide network of private banks, linked by phones and computers, that buy and sell money round the clock...
...they monitor the markets, officials watch for signs that intervention may be needed. Sharp changes in the dollar's price can lead to orders to buy < or sell. Traders also wage psychological warfare. They did that last week simply by calling private banks and asking for the latest currency quotes. The jittery dealers on the other end took the calls as signals that the Fed was in the market, and rushed to sell more dollars...
Such moves can cause bitterness if they are not carefully coordinated. The U.S. and six European allies last February launched a joint intervention that brought the dollar down slightly from its all-time peak. But while the Bundesbank put $4 billion into a $10 billion international fund to buy currencies, Washington supplied only $600 million. That left the Germans vulnerable to a big loss when the price of the dollar rose again this summer, lowering the value of the marks that they had bought. Now Bonn wants assurances that the U.S. will do its share to finance the current fund...
...many Japanese yen will it take to buy a U.S. dollar? What kind of insurance is going to be sold in South Korea? How many trees will be felled in Canadian forests, and how many pairs of shoes shipped out of Italy or Brazil...