52/YOUR MONEY OR YOUR LIFE!
But the IMF has itself pushed for the generalised deregulation of
capital flows, in particular through the elimination of exchange
controls.
For his part, the head of the investment strategy division of Banque
Bruxelles Lambert, Roland Leuschel, declared, 'We are a bit like an
airline pilot who knows she is going to crash but whose computer
controls no longer respond. The computer follows its own rules, that's
what the market is like' (Le Monde, 5 April 1995).
We are now beginning to feel the effects of financial deregulation.
This deregulation was systematically pursued by the governments of
the main industrial powers, the international financial institutions -
the IMF, World Bank, Bank for International Settlements - whose
policies these governments by and large dictate (which doesn't mean
the international institutions don't have some degree of autonomy),
and the MNCs.
Currency markets are the segment of the financial markets that
have registered the strongest growth. During the 1980s, the volume
of transactions increased ten-fold. Yet the main function of currency
trading is supposed to be that of providing currency to settle foreign
trade contracts. However, the total value of actual trade transac
tions was not even 10 per cent of the value of foreign currencies
traded on exchange markets. According to the latest study by the
Bank for International Settlements (BIS), more than SI,400 billion
change hands every day on currency markets (Chesnais, 1996).
While there is no disagreement over the amounts traded each day,
there are differences as to how much of this corresponds to
speculative transactions. Basing himself on BIS studies, F. Chesnais
(Chesnais, 1996) says that somewhere between 5 and 8 per cent
correspond to transactions linked to the 'real' international
economy. For his part, J. Adda (Adda, 1996)says, '95 percent of the
value of transactions carried out on exchange markets correspond to
financial operations with no connection to trade in goods and
services'. Also basing himself on BIS figures, D. Plihon (Plihon, 1996)
says, 'transactions on exchange markets of a purely financial nature
account for 50 times more total volume than those linked to global
trade in goods and services'. This would mean that less than 2 per
cent of the value of all transactions is linked to actual international
trade in goods and services!