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Forex multi-account manager Z-X-N
Accepts global forex account operation, investment, and trading
Assists family office investment and autonomous management

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In two-way foreign exchange trading, sophisticated investors typically possess a highly mature mindset, but capital is often their most scarce resource.

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Sufficient capital is crucial in foreign exchange investment, even more important than any other factor. When investors have sufficient capital, they develop a calmer mindset and are more rational in their investment decisions. This rationality prevents them from rushing for quick results and leads them to adopt long-term investment and holding strategies rather than blindly pursuing quick profits.
Investors with sufficient capital are more cautious, which helps reduce risk. With effective risk management measures in place, they are less likely to suffer significant losses in a short period of time. Through continuous learning and practice, even in poor market conditions, even if they fail to achieve a profit within a year, they will not suffer significant losses.
On the contrary, sufficient capital allows investors to maintain a relaxed attitude, viewing investment as a recreational activity rather than a risky gambling venture. This shift in mindset is crucial for long-term, stable investment. It not only helps investors remain calm in the face of market fluctuations, but also helps them better grasp long-term investment opportunities and achieve steady wealth growth.

Sources of Platform Liquidity and Trader Profit and Loss Strategies in Forex Trading.

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In the forex trading market, if traders clearly understand the core sources of platform liquidity and the operating logic of different liquidity models, they can more rationally assess the trading environment, formulate operational strategies, and manage gains and losses with composure, avoiding irrational trading errors caused by a vague understanding of platform mechanisms.
Forex platforms primarily provide liquidity in two core models. The first is the direct market maker model (MM model). Such platforms only require a market maker license to conduct related business. From an operational perspective, the core characteristic of the market maker model is "in-house processing of client orders." This model operates in two ways: first, the platform directly accepts client orders, becoming the client's counterparty and forming a "betting" relationship with the client; second, the platform uses its internal system to match long and short orders from different clients, creating a trading counterparty between clients without having to transmit orders to the external market. In this model, client orders do not enter the global forex market for actual execution. The platform balances risk and reward by controlling the flow of orders, while generating revenue through spreads, commissions, and other means.
The second liquidity provision model involves platforms connecting with external liquidity providers (LPs). In financial markets like forex and stocks, liquidity providers are typically institutions with strong financial resources and regulatory compliance, including large commercial banks (such as JPMorgan Chase and HSBC), specialized financial institutions, and large trading firms. The core function of these institutions is to inject liquidity into the market and facilitate smooth transactions by continuously providing buy and sell quotes and proactively assuming the obligation to buy and sell assets. When a trader places an order on the platform, the platform passes the order to a partner liquidity provider, who then completes the final market transaction. In this role, the platform acts more as an "order intermediary," profiting from commissions or service fees from liquidity providers.
In addition to the two single models mentioned above, most forex platform brokers adopt a "hybrid" model, flexibly adjusting their order processing methods based on specific circumstances such as order size and client type. Specifically, the platform will direct some orders to the external market (i.e., using a liquidity provider model). These orders are commonly referred to as "market orders" and primarily cater to the trading needs of "Warehouse A clients." Typically, Warehouse A clients are large investors with large orders. If the platform were to adopt an internal market-making model, this would incur significant risk (if the market trend aligns with the client's order, the platform could face significant losses). Therefore, directing these large orders to the external market effectively diversifies the risk. Meanwhile, the platform will directly handle another portion of these orders internally using a market-making model. These orders typically come from retail investors with small capital. Due to their smaller size, the platform can handle them through internal matching or self-acceptance, without significantly impacting the platform's overall risk tolerance. This flexible hybrid model ensures the platform's risk management while meeting the trading needs of diverse client types. It is a common operating option in the current forex platform industry.
For forex traders, a clear understanding of the platform's liquidity sources is crucial for rationally managing profits and losses and developing sound trading strategies. Based on an understanding of liquidity models, traders should avoid blindly engaging in short-term, heavy-weight trading. Short-term trading relies on short-term market fluctuations for profit, and different liquidity models vary in order execution speed and slippage risk. (For example, under the market maker model, the platform may experience slippage due to internal order fulfillment, especially during periods of high market volatility.) Heavy-weight trading can magnify these risks, and misjudgment can lead to significant losses. Furthermore, short-term, heavy-weight trading can easily trigger emotional fluctuations, leading traders to make impulsive decisions when faced with short-term gains and losses, further exacerbating risk.
In contrast, a light-weight, long-term trading strategy is more stable and more consistent with a rational understanding of platform liquidity models. Light-weight, long-term traders don't seek quick profits in the short term. Instead, they patiently wait for high-quality trading opportunities based on their understanding of long-term market trends. After establishing an initial position, if market trends meet expectations and unrealized profits reach a certain level, they gradually increase their positions in small increments, achieving long-term wealth growth through the accumulation of steady, small profits. From a risk management perspective, operating with a light position effectively reduces the potential loss from a single trade. Even when faced with short-term market fluctuations or slippage caused by platform liquidity, it avoids the pitfalls of being overly heavily invested in a position. From an emotion management perspective, a long-term strategy allows traders to focus less on short-term gains and losses, countering both the fear of floating losses and the greed fueled by short-term gains, thus maintaining rational trading decisions.
Conversely, heavy short-term trading not only struggles to avoid emotional interference, but also increases the likelihood of operational errors due to the combined effects of short-term market fluctuations and platform liquidity characteristics. For example, under a market maker model, short-term heavy positions can result in significant slippage if they conflict with the platform's internal risk exposure. Under a liquidity provider model, short-term heavy positions can lead to execution delays due to temporary liquidity shortages. These factors exacerbate trading risks, ultimately leading traders to frequently adjust their strategies driven by emotion, trapping them in a vicious cycle of "losses-anxiety-errors." Therefore, only by fully understanding the sources of platform liquidity can traders fundamentally understand the suitability of different trading strategies. By choosing a stable, long-term strategy with a light position, they can rationally manage gains and losses and achieve their long-term trading goals.

In two-way foreign exchange trading, investors are often affected by market fluctuations, and their emotions fluctuate accordingly. To avoid this, investors can focus on three aspects: pre-trade preparation, emotional control during trading, and post-trade reflection and adjustment.

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Pre-trade preparation is crucial. First, investors need to develop a clear trading plan. This includes clearly defining their trading goals, such as setting a reasonable profit target, such as a monthly profit target of 10% to 20% of their initial capital. Setting a stop-loss point is also crucial to help limit losses. For example, after buying a currency pair, if the price drops below the set stop-loss point, such as 5% below the purchase price, sell decisively to avoid further losses. Investors also need to choose an appropriate trading strategy based on their trading style, such as short-term trading or long-term investment. For short-term trading, you can focus on technical analysis indicators, such as moving averages. When a short-term moving average crosses above a long-term moving average, it may be a buy signal; when it crosses above, it may be a sell signal. For long-term investment, you can focus on economic fundamentals, such as a country's interest rate policy and inflation rate. For example, a country's continued interest rate hikes may attract capital inflows into its currency, driving its value up.
Perfect market research is also essential. Investors need to understand the fundamentals of the forex market. As the world's largest financial market, its price fluctuations are influenced by a variety of factors, including economic data releases (such as GDP and unemployment rates), political events (such as elections and trade agreements), and market sentiment. For example, strong economic data, such as exceeding GDP growth expectations, often strengthens the value of a country's currency. Investors can also enhance their understanding of forex trading by reading professional financial books and taking forex trading training courses. It's also important to understand the characteristics and risks of different trading instruments, such as margin trading and CFDs. For example, while margin trading can increase trading volume, it also increases risk. If market trends go against expectations, losses can accumulate more quickly.
Appropriate capital management is also crucial for pre-trading preparation. Investors shouldn't invest all their funds in forex trading. Instead, they can adopt a capital allocation strategy, allocating a portion for daily expenses, savings, and other purposes to prevent forex trading losses from impacting their daily lives. For example, if you have 100,000 yuan, you could allocate 30,000 to 50,000 yuan to forex trading and the remainder to other stable investments or savings. It's also important to manage the amount of capital invested in each trade. Generally speaking, the amount invested in a single trade should not exceed 10% to 20% of your total trading capital. This way, even if a loss occurs on a particular trade, it won't be a devastating blow to your overall capital.
Emotional control is also crucial during trading. Investors need to remain calm and objective. When the market fluctuates significantly, don't be swayed by temporary gains or losses; make decisions based on your trading plan and strategy. For example, when the market suddenly experiences a sharp drop due to breaking news (such as a surprise interest rate cut by a central bank), don't panic and sell all your positions. Instead, analyze the long-term impact of the news on the currency pair to determine if it meets the stop-loss or take-profit criteria in your trading plan. Investors should also avoid emotional trading, avoiding blindly chasing highs out of greed or prematurely cutting losses out of fear. For example, when a currency pair's price rises rapidly and you've already made a significant profit, you might be reluctant to sell because the price continues to rise, hoping to reap further profits. This can lead to a sudden price reversal and a decline, significantly reducing profits or even causing losses.
Using trading tools to assist with emotional management is also an effective method. Investors can utilize stop-loss and take-profit orders. Stop-loss orders can help automatically limit losses, automatically closing the position when the price reaches the stop-loss point. Take-profit orders can lock in profits. For example, when buying EUR/USD, set a stop-loss point at 1.1000 and a take-profit point at 1.1200. When the price drops to 1.1000, a stop-loss order will automatically sell, limiting losses. When the price rises to 1.1200, a take-profit order will automatically sell, locking in profits. This prevents indecision from leading to missed stop-loss or take-profit opportunities. Investors can also keep a trading log, recording the time, currency pair, direction, amount, reason for each trade, and results. By analyzing your trading log, you can identify patterns in your emotional trading. For example, you may find that you tend to trade impulsively during periods of high market volatility. By recording and analyzing your log, you can remind yourself to remain calm in similar situations.
Post-trade reflection and adjustment are equally important. Investors should regularly review their trading records and analyze which trades were successful and which were unsuccessful. For successful trades, analyze the reasons for success, such as whether the trading strategy was sound or the market environment was favorable. For unsuccessful trades, identify the reasons for failure, such as whether the trading plan was inadequate or whether your emotions led to poor decisions. For example, we've discovered that many failed trades stem from not strictly adhering to stop-loss strategies. When prices fall, investors take chances and fail to implement stop-loss orders in a timely manner, ultimately leading to further losses. Based on this experience, investors need to adjust their trading strategies. If they find their trading strategies are ineffective in certain market conditions, such as during periods of high volatility when their original technical analysis strategies are ineffective, they can consider incorporating more fundamental analysis factors to adjust their strategies. They should also adjust their mindset. If they find that their emotions frequently affect their trading, they can learn emotional management techniques, such as meditation and deep breathing, to help them relax and maintain a calm mindset before trading.

In the forex trading market, the core fundamental understanding that traders must establish is that forex trading is inherently a "low-risk, low-return" investment. Its profit strategy relies on long-term trend accumulation and risk control, rather than short-term, high-risk speculation. For investors seeking to "achieve high returns in the short term through risk-taking," forex trading is not a suitable option. This characteristic is not determined by the random nature of market fluctuations, but rather by the market landscape shaped by the monetary policies and exchange rate intervention strategies of global central banks over recent decades, which directly influences the risk-return structure and operational logic of forex trading.

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1. Global Central Bank Policy Direction: Laying the Low-Risk, Low-Return Market Tone. In recent decades, the monetary policy logic of the central banks of major currency issuers has profoundly altered the volatility of the forex market, directly driving its evolution toward a "low-risk, low-return" strategy. To maintain their trade competitiveness and stimulate economic growth, most central banks of major currencies (such as those in the Eurozone, Japan, and the United Kingdom) have long adopted a "competitive devaluation" strategy, lowering interest rates and increasing liquidity injections Using various means to suppress currency appreciation, low, zero, and even negative interest rates have become the norm in global monetary policy. For example, the Bank of Japan has maintained low interest rates for a long time since 2001 and introduced a negative interest rate policy in 2016. The Eurozone has entered a negative interest rate era since 2014, which has lasted for over eight years.
Under this monetary policy environment, central banks are forced to frequently intervene in the market (such as direct foreign exchange market transactions, verbal intervention, and adjustments to policy tools) to stabilize exchange rates and prevent excessive currency fluctuations from impacting economic objectives. For example, when a country's currency faces appreciation pressure due to short-term capital inflows, the central bank will sell its own currency and buy foreign currency, increasing the supply of local currency to suppress the exchange rate. Conversely, if the local currency depreciates excessively, the central bank will buy its own currency and sell foreign currency to support exchange rate stability. The direct result of this intervention is to lock the exchange rate within a relatively narrow fluctuation range, significantly reducing the exchange rate's unilateral trend and volatility. This makes it difficult for foreign exchange trading to generate high-yield opportunities brought about by high volatility, ultimately resulting in a "low-risk, low-yield, and highly consolidating" environment.
2. Short-term Trading Market Shrinks: Lack of Trends Leads to Scarce Opportunities. The current global foreign exchange market is experiencing a decline in short-term traders and reduced market activity. The core reason is that the profit logic of short-term trading has become out of sync with market conditions. As more and more short-term traders realize that it's no longer possible to profit from short-term fluctuations in the foreign exchange market, they are actively withdrawing from short-term trading, further exacerbating the market's "stagnation"—a stagnation not due to insufficient market liquidity but rather to a scarcity of tradable short-term opportunities.
From a market perspective, short-term trading profits rely on short-term trend fluctuations or large swings in currency exchange rates. The current interest rate system and exchange rate linkage mechanism of major global currencies directly suppress such fluctuations. On the one hand, interest rates for major currencies are highly tied to US dollar interest rates (for example, interest rate adjustments for currencies like the euro, pound, and yen often rely on the Federal Reserve's policy direction to avoid excessive exchange rate deviations). This interest rate differential remains within an extremely narrow range. Interest rate differentials are a key driver of short-term capital flows and exchange rate fluctuations. These narrow differentials directly lead to a decrease in cross-border capital flows and a lack of momentum for exchange rate fluctuations. On the other hand, regular central bank intervention has further compressed exchange rate volatility. The average daily volatility of most major currency pairs (such as EUR/USD and USD/JPY) has decreased by 30%-50% compared to a decade ago, and they have been in a state of consolidation for a long time, lacking a clear unilateral trend.
This "narrow range, trendless" market environment presents short-term traders with a dilemma: they struggle to profit from price arbitrage by capturing short-term fluctuations, while also finding opportunities to heavily invest in larger trends. Even if investors are willing to take on high-risk, heavily invested positions, the market lacks the potential for significant profits. Ultimately, short-term trading has shifted from a "high-risk, high-return" model to a "high-risk, low-return" model, losing its appeal to traders.
3. Breakout Trading is Abandoned: The Basis of Trend Weakening and Disintegration Strategies. Over the past two decades, the "breakout trading" strategy, once widely used in forex trading (i.e., profiting from a unilateral trend by catching an exchange rate breakout above a key resistance or support level), has gradually fallen out of favor. The core reason is the significant weakening of the forex market's trend, which has deprived the strategy of its fundamental market foundation.
The effectiveness of breakout trading relies heavily on a sustained unilateral exchange rate trend. Once the exchange rate breaks through a key level, a sustainable trend must form in order for traders to reap sufficient profit. However, the current global foreign exchange market environment completely fails to meet these requirements. First, central bank intervention has become routine. Major central banks frequently maintain exchange rates within their target ranges through frequent operations. Even if exchange rates occasionally break through key levels, they are often pulled back within these ranges by central bank intervention, making it difficult for a sustained trend to form. Second, low interest rates suppress volatility. In a low-interest environment, capital risk appetite decreases, short-term speculative capital flows decrease, and exchange rates lack the financial support needed to form a trend. Third, market structure has shifted. Since the bankruptcy of FX Concepts, a renowned global foreign exchange fund in 2013, large fund managers specializing in foreign exchange trend trading have virtually disappeared. These funds, once a key force in driving long-term exchange rate trends, have further weakened the market's trend-setting nature, creating a vicious cycle of "trend absence—fund withdrawal—weaker trend."
The core characteristics of the current foreign exchange market have shifted from "trend-driven" to "consolidation-driven." Most currency pairs fluctuate within fixed ranges for extended periods, and breakthroughs through key levels are often followed by "false breakouts" (i.e., rapid pullbacks that fail to establish a trend). Breakout trading strategies not only fail to generate profits but are also prone to triggering stop-loss orders due to "false breakouts," leading to sustained losses. This shift in the market environment has caused breakout trading methods to devolve from an "effective strategy" to a "high-risk strategy," ultimately leading to their gradual abandonment by traders. Summary: Reconstructing Forex Trading Perceptions and Adapting Strategies. The current forex market's characteristics of "low risk, low return, lack of trend, and dominant consolidation" are essentially the result of the combined effects of global central bank monetary policy, exchange rate intervention strategies, and market structure. Traders need to completely reframe their understanding of the forex market: abandon the expectation of "making big money in the short term" and embrace its "low returns and slow accumulation" nature. They should also adjust their trading strategies, shifting from "trend trading and short-term speculation" to "range trading and swing trading." By capturing small opportunities within narrow fluctuations and strictly controlling positions and stop-loss orders, they can achieve long-term, stable profits.
Unless there is a fundamental shift in the global monetary policy landscape (such as a collective exit from low interest rates and the abandonment of exchange rate intervention by major central banks), the forex market's "low risk, low return, and dominant consolidation" characteristics will persist. Traders' core competency will no longer be "the ability to capture trends" but "the ability to adapt to a volatile market and control risk."

In the global two-way foreign exchange market, the eight major currencies (US dollar, euro, yen, British pound, Australian dollar, Canadian dollar, Swiss franc, and New Zealand dollar) are the core trading targets for traders.

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This phenomenon stems not only from the global influence of the economies behind these currencies, but is also closely related to the foreign exchange policies of their issuing countries/currency zones. Compared to some countries that implement strict foreign exchange controls, the issuers of the eight major currencies generally adopt an open foreign exchange management strategy, rarely imposing long-term, systematic foreign exchange control measures. This policy choice stems from the confidence inherent in their economic strength, the international status of their currencies, and the maturity of their financial markets. Instead of relying on "blocking" foreign exchange flows to maintain stability, these currencies can instead reap greater global economic benefits through "openness."
1. Sufficient international credit for the currency: No reliance on controls is required to maintain holdings. The core advantage of the eight major currencies lies in their strong international credit foundation, eliminating the need for administrative controls to compel market holdings. The US dollar, euro, yen, and British pound, globally recognized as "hard currencies," collectively account for over 90% of global foreign exchange reserves and serve as the core vehicles for central banks to allocate their reserves, settle international trade, and conduct cross-border investment. While the Australian dollar, Canadian dollar, Swiss franc, and New Zealand dollar are not among the top reserve currencies, their stable economic fundamentals (such as the strong correlation between the Australian dollar and commodity prices and the Swiss franc's safe-haven properties) have made them "secondary hard currencies" that global investors and traders are willing to actively hold.
This willingness to actively hold currencies eliminates the need for the issuers of the eight major currencies to "lock in" foreign exchange reserves through regulation. For example, global oil trade is settled in US dollars, while trade within Europe and with neighboring countries is primarily settled in euros. Natural market demand for these currencies has created a "natural inflow" of foreign exchange. Conversely, if such economies implement foreign exchange controls, it will send a negative signal to the market of limited currency liquidity, leading trading partners and investors to worry about currency convertibility and, in turn, reduce their use of the currency. This will ultimately damage the currency's long-term international credit standing and undermine its core competitiveness.
Second, Highly Externally Oriented Economy: Controls Will Directly Impact Core Industries. The economies of the eight major currency-issuing countries/currency zones are all significantly externally oriented, and their core industries are highly dependent on global markets for development. Foreign exchange controls will directly disrupt a key link in the economic cycle. From the perspective of economic structure, the core income sources of such economies can be divided into three categories: the first is resource export (such as Australia's reliance on iron ore and coal exports, New Zealand's reliance on agricultural product exports, and Canada's reliance on energy and mineral exports). Their export revenue generally accounts for more than 20% of GDP. If foreign exchange controls are implemented to restrict the exchange of export proceeds, it will directly lead to the inability of companies to promptly recover local currency funds, affecting production and operations; the second is cross-border investment (such as the United States and Japan, where domestic companies have deployed production and sales networks globally and overseas revenue accounts for a very high proportion). If cross-border capital flows are restricted, it will hinder companies' overseas investment and profit repatriation, weakening their global competitiveness; the third is financial services (such as London, UK, as the world's largest foreign exchange trading center, and Switzerland, as the core market for private banking and wealth management). The core value of their financial industry lies in the "free flow of capital." If foreign exchange controls are implemented, it will directly lead to the loss of customers for financial institutions and destroy the foundation of the industry.
Take New Zealand as an example. Agricultural exports account for over 30% of its GDP, and over 90% of these exports are destined for global markets. If foreign importers are unable to freely pay in New Zealand dollars, or if New Zealand exporters are unable to freely convert foreign currency into local currency, this will directly lead to unsold agricultural products and a domestic agricultural crisis. This "deep entwining of the economy with global markets" means that the eight major currency issuers cannot afford the costs of foreign exchange controls.
Third, High Financial Market Maturity: Independent Risk Hedging Capabilities. The eight major currency issuers/currency areas possess the world's most mature and deep financial markets, capable of managing exchange rate fluctuations and capital flow risks through market-based means, without relying on regulatory "risk avoidance." From a market perspective, the financial markets of these economies exhibit three key characteristics: First, they are large (for example, the US Treasury market exceeds $30 trillion, and the Eurozone bond market exceeds $20 trillion), capable of accommodating large-scale capital inflows and outflows and less susceptible to sharp market fluctuations caused by short-term capital flows; second, they feature a rich variety of instruments (developed markets for derivatives such as foreign exchange forwards, options, and swaps allow businesses and investors to hedge against exchange rate risk through hedging tools); and third, they have robust regulatory frameworks (including robust macroprudential policy frameworks such as the liquidity adjustment tools of the Federal Reserve and the European Central Bank, and the UK Financial Conduct Authority's (FCA) cross-border capital flow monitoring mechanism), enabling them to guide capital flows through market-based means.
For example, when the yen faces temporary depreciation pressure, the Bank of Japan can raise interest rates to increase the yield on yen-denominated assets, attracting foreign capital to increase holdings of yen assets and, in turn, driving the yen's exchange rate back up; when the British pound faces appreciation pressure, the Bank of England can expand its asset purchases to release liquidity, lower market interest rates, and curb excessive foreign capital inflows. This "market-based regulatory capacity" eliminates the need for the eight major currency issuers to "block" risks through administrative controls, instead enabling them to balance risks through market mechanisms.
Fourth, Capital Flows Demand Bidirectionally: Opening Up Consists of Its Own Development Logic. Capital flows among the eight major currency issuers exhibit a "bidirectional equilibrium," requiring both "capital outflows" to generate global returns and "capital inflows" to support domestic development. Foreign exchange liberalization is a prerequisite for achieving this cycle. From the perspective of capital outflows, economies like the United States, Japan, and the United Kingdom have large domestic capital stocks and need to increase their assets through overseas investment. For example, the United States' outbound direct investment exceeds $6 trillion, and Japan's outbound investment exceeds $3 trillion. The repatriated profits from these investments are a key driver of their respective economic growth. Imposing foreign exchange controls to restrict capital outflows would block this revenue stream. From the perspective of capital inflows, economies like the Eurozone, Canada, and Australia require foreign investment to support domestic industrial upgrading and infrastructure development. For example, the Eurozone promotes industrial transformation by attracting foreign investment in new energy and high-end manufacturing, while Australia attracts foreign investment to develop its mineral resources. Restricting capital inflows would lead to insufficient domestic investment and constrain economic growth.
Take the United States as an example. It needs domestic companies to invest capital in high-growth markets around the world (such as Southeast Asia and Latin America) to generate high returns, and it also needs foreign investors to purchase U.S. Treasury bonds, stocks, and other assets to finance the U.S. government and businesses. This logic of "two-way capital flows and mutual support" dictates that foreign exchange liberalization is an inevitable choice for the eight major currency issuers. Regulation would not only restrict capital outflows but also block capital inflows, ultimately harming the economic cycle.
V. International Rules and Credit Constraints: Regulation will undermine global discourse power. The eight major currency issuers are mostly developed countries (such as G7 and OECD members). They are the primary makers and participants of global economic rules. Their policy choices must conform to the international rules they preside over while also maintaining their own "credit image." From the perspective of international rules, these economies have led the establishment of an international economic order centered on the free flow of capital since World War II (for example, Article VIII of the IMF Agreement encourages member countries to eliminate current account exchange controls, and the OECD's Capital Liberalization Code requires member countries to open their capital accounts). Imposing exchange controls would constitute a "rule-breaking" move, weakening their voice in global economic governance. From a credit perspective, one of these economies' core competitive advantages lies in "policy stability and predictability." The sudden imposition of exchange controls would undermine market trust in their policies and trigger a "credit crisis."
Take Switzerland, for example. The core selling point of its private banking industry is "capital freedom and confidentiality and security." Approximately one-third of the world's cross-border private wealth is managed through Swiss banks. If Switzerland were to impose exchange controls, it would directly undermine client confidence in the security and liquidity of its funds, triggering a large-scale capital outflow and devastating its wealth management industry. This need for "international rule constraints and maintaining a credit image" further strengthens the eight major currency issuers foreign exchange liberalization policy.
Additional information: This is not "absolute non-intervention," but rather "emergency regulation." It should be clarified that the eight major currency issuers do not "completely refrain from intervening in the foreign exchange market." Rather, they avoid implementing "long-term, blanket" foreign exchange controls. They only adopt "temporary, market-based" regulatory measures in extreme market conditions. The core characteristics of these measures are "short-term" and "targeted" nature. For example, in 2015, the Swiss National Bank temporarily lifted the franc-euro peg due to the transmission of euro depreciation pressure from eurozone quantitative easing. In 1992, when the British pound faced speculative attacks, the Bank of England responded to capital outflows by sharply raising interest rates (at one point raising the benchmark rate to 15%). At the beginning of the 2020 pandemic, the Federal Reserve established currency swap agreements with multiple central banks to ease tight US dollar liquidity. These measures are "emergency measures" and will be terminated once market stability returns. They will not constitute long-term regulatory policies, and their core objective remains "maintaining market openness."
Summary: The Core Logic of Foreign Exchange Policy Selection—"Confidence Determines Strategy." Whether a country or currency zone implements foreign exchange controls is essentially determined by its economic confidence. The confidence of the eight major currency issuers stems from three factors: the international credibility of their currencies (no need for mandatory holdings), the global competitiveness of their export-oriented economies (controls would cut off their financial resources), and the risk-management capabilities of their mature financial markets (no need to avoid risks). Therefore, liberalizing foreign exchange flows can achieve multiple benefits: attracting foreign investment, promoting trade, and enhancing the currency's status. However, some countries implement foreign exchange controls due to insufficient foreign exchange reserves, fragile financial markets, and a high degree of economic dependence on foreign exchange, yet lack core competitiveness. They can only achieve short-term stability by "blocking" capital outflows through controls.
In short, the choice of foreign exchange policy is a reflection of strength: Entities with strong economies, sufficient monetary credibility, and mature markets dare to reap the global benefits of opening up; while those with weaker strength and less resilience to risks can only seek short-term security through controls. The open foreign exchange policies of the eight major currency issuers are a direct reflection of their global economic status.

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13711580480@139.com

+86 137 1158 0480

+86 137 1158 0480

+86 137 1158 0480

z.x.n@139.com

Mr. Z-X-N

China · Guangzhou

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