Are bank’s speculative profits at the expense of traders?

Authors

  • H.G. GRUBEL

DOI:

https://doi.org/10.13133/2037-3643/10945

Keywords:

Banks, Speculative trade, Foreign exchange markets, Economic efficiency

Abstract

Banks extract large profits through speculative trading on the foreign exchange markets and some authors have argued that banks are the winners and that the traders of goods and services are the losers in this game of foreign exchange dealing. The author argues that banks earn a return through providing a service of smoothing exchange rates over time and that this represents a benefit to international traders in other markets. It is argued that the banks' speculative trade raises economic efficiency in the real economy by reducing the volatility of exchange rates.


JEL: F31, G21

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Published

2013-10-23

How to Cite

GRUBEL, H. (2013). Are bank’s speculative profits at the expense of traders?. PSL Quarterly Review, 43(174). https://doi.org/10.13133/2037-3643/10945

Issue

Vol. 43 No. 174 (1990)

Section

Editorial

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