If You Ask Me: A Global Banker Reflects on Our Times

Wriston, Walter B.


Too Big To Move


Mr. Wriston, I have a Wall Street Journal article headed "Foreign Money Trades Produced Almost 21 percent of Citicorp's 1978 Net." It goes on to say that this income came from taking currency positions in foreign exchange markets. Is this type of activity destabilizing and contributing to the general decline of the dollar? Is it setting off so-called vicious cycles in countries such as Germany, Japan and the United States?

I've been trotting around the world for thirty years, and it's my experience that whenever countries have poor fiscal and monetary policies, and their currencies start to depreciate, they always look for a cause outside themselves. Right now, they say, "Gee, it must be that currency traders don't like us." That's like saying the government bond market declined on Wall Street yesterday because Salomon Brothers[14]  doesn't like it.

The foreign exchange market is just too big for any one party to move it. If you took all the assets of all the U.S. banks together and sold them in the market, it would be less than one day's trading. So it's a myth that somebody can influence a market of that magnitude.

A few years ago, for example, the British were fighting to keep the pound from being devalued. They lost their entire reserves, borrowed a billion dollars from the International Monetary Fund, and lost that--all within a couple of months. So they devalued the pound anyway. It was only when the Fund put them on a sound monetary policy that the pound began to improve.

At any given minute, somebody changing a major currency position at the margin might move the exchange rate one fifth of a point, but that's the total extent of it. The market is just too big for even the governments' central banks to do much about it, as witness the floating exchange rates, the failure of the currency snake[15]  in Europe, and the failure of fixed exchange rates.

So, we don't take those charges too seriously. Chairman Miller[16]  testified before the Reuss Committee that the Fed saw no evidence whatsoever that the commercial banks had influenced the rate on the dollar. Mr. Carswell, the Deputy Secretary of the Treasury, testified also that the Treasury studies showed that the allegation of influence was not true.


[14] A leading Wall Street investment firm and a major underwriter and dealer in many types of securities, including government bond issues.

[15] An agreement among Germany, Belgium, Denmark, the Netherlands and Norway to maintain relatively fixed exchange rates in trade with one other, while allowing their currencies to float in unison against other currencies. Day-to-day fluctuations of member currencies within a permissible 4 percent band, when charted against non-member currencies, resemble the undulations of a snake in a narrow tunnel.

[16] G. William Miller, then Chairman of the Board of Governors of the Federal Reserve System.

  • The document was created from a compilation of interviews and question and answer segments with Walter B. Wriston which was later compiled into "If You Ask Me: A Global Banker Reflects on Our Times" in 1980. The original speech is located in MS134.001.034.00018.
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 Title Page
If You Ask Me: A Global Banker Reflects on Our Times
I: Getting Down to Fundamentals
The Big Cop-out
You Can't Go Bail for Everyone
Risk Is What It's All About
II: Some Basic Ills of the Body Politic
Lincoln Wouldn't Have Made It
Unpredictable Is a Dangerous Country
The Pitfalls of Single-issue Politics
Expect To Get Zapped
The Perils of Legal Pollution
The Injustice of Our Tax System
Those Wonderful People Who Bring You Inflation
Stop the Presses
Silly Premises Lead to Nutty Conclusions
Easier Said Than Done
III: New York, New York
New York City Is Alive And Well
The Road Back
IV: Careers
Rx for Happiness
Good Forward Planning
Dull Job?
A Simple Matter of Survival
Making It at Citibank
What Fast Track?
No Hiding Place
V: Once Around the World Quickly
South Africa
China: A Matter of Timing
The Real Significance of Iran
Iran and the Money Markets
Fashions in Country-criticizing
VI: The Global Financial Scene
The Elusive Eurodollar
De Facto Payments Mechanism
Too Big To Move
The Foreign Exchange Game
They Can't Leave the System
Baskets of Money
Swiss Francs
The Value of a Dollar
Not a Loss Since 1897
A Rational View of LDC Loans
Free Trade Benefits Consumers
The Destructive Costs of Regulation
The Big Rip-off
A Real Entitlement
Can Regulations Prevent Bum Loans?
The Insidious Side of Controls
Competition in Regulation
VIII: The Shape of Things To Come
Not As Big As You Think
What Lobby?
Armageddon Is Late, as Usual
Some Simple Facts about Interest Rates
An Expensive Luxury
How Big Is Big?
What We Did Yesterday Won't Work Tomorrow
A Matter of Semantics
Unpredictable Is a Dangerous Country
Privacy: A Serious Problem
The Unseen Revolution
Things Are Going To Be Different
Take the Handcuffs off Everybody
The Gray Areas of Lending
No Mouse under the Rug
Thank God We Don't Have National Banking
Competition Keeps You Awake
Accounting for Loan Losses
Not a Utility
People Like It
Computer Frauds
Some Final Words on Responsibility
About the Author