Currency crisis Essay Example | Topics and Well Written Essays - 1500 words

Currency crisis - Essay ExampleHowever, his faculty member excellence and outstanding performance in various portfolios he has held proves his critics wrong (Blackden 2012). The responsibility of salvaging the United terra firmas currency crisis will be his primary responsibility as the governor of the Central imprecate of England. Blackdens obligate in The Telegraph highlights some of the attributes that objective Carney possess that makes him a good alternative for the position. The article clearly outlines possible ways that economists think Mark Carney would use to restore Britains dwindle down economy. In this way, it has proved and highlighted some of the theories proposed earlier by economists in their attempts to explain the causes and ways of minimizing currency crisis. Mark Carney has been portrayed to believe in closer supervision and maintenance of high capital requirements for large monetary institutions (Blackden 2012). This is opposed to what Sir Mervyn King ad vocates. However, it is worth noting that underdevelopment of the argoting sector can cause a currency crisis. This is because the rudimentary bank may focus on financing the banking sector to bail them from their fiscal problems at the expense of maintaining the stick (Komulainen 1999). This may bring currency instability leading to a currency crisis. ... This is aimed at making the financial system safe as the economy recovery process is being conducted. It is similar to the canonical currency-crisis clay sculpture. This model as proposed by Stephen Salant asserts that speculators have tendencies of holding exhaustible resources with expectations that their prices would rise. The increase in the prices of these resources will then whirl the speculators a return rate equivalent to other assets (Krugman n.d.). In this way, the exchange rates would be stabilized. Therefore, it is demand to comprehend Blackdens assertion on the need for Mark Carney to empower British banks to ho ld broad capital. New-wave theories have also explained that recent currency crises affecting various countries are as a issue of the weak banking systems. Therefore, holding massive capital would imply that the banks can sustain themselves and would not need bailing from the central bank (Fourcans & Franck 2003). In this scenario, the central bank will prevent a possible currency crisis. The article also mention that Mark Carney would urge United Kingdoms leading companies to invest in new markets such as Brazil, China and India. Opening up and venturing into new markets would help Britain a ample deal since it would steer the economy to a fast-paced recovery process (Fourcans & Franck 2003). On the other hand, venturing into unknown and emerging markets would give investors the confidence that the currency is stable thus, they would not withdraw from the British market due(p) to fear of impendent collapse of the economy (Fane 2000). Additionally, Mark Carneys appointment is expected to save UK from the imminent effects of the on-going Euro zone crisis. This is because the United Kingdom depends on foreign money to fund most of its minded(p)