Second, by stabilizing exchange rates across European countries, the influence of the US dollar in Europe would be significantly weakened.
Simply put, it prevents the US dollar from acting as an intermediary and from profiting from the price difference.
However, the prerequisite for achieving these goals is that exchange rates between countries must remain fixed and not fluctuate.
However, with the fall of the Berlin Wall in 1989 and the reunification of East and West Germany, changes began to occur.
After the merger, the D country's spending skyrocketed, and in order to alleviate this situation, the D country's authorities printed money like crazy.
This led to inflation.
In order to cope with inflation, the authorities in Country D had no choice but to raise interest rates on bank deposits in order to quickly withdraw currency.
At this time, in order to stimulate its economy, country Y had no choice but to lower interest rates and encourage its citizens to spend their money.
If there is no connection between country D and country Y, then there will be no financial effect.
The problem is that they are a community with a shared future.
To give an example.
One dollar could buy five bottles of beer in country D, while the same dollar could buy eight bottles of beer in country Y.
However, the same dollar is deposited in the bank.
So, in country D, you can get 2 cents in interest, but in country Y, you can only get 1 cent in interest.
This action directly impacted the exchange rate.
At this point, country Y was caught in a dilemma.
They can either be forced to raise interest rates and wait for the economy to collapse.
Alternatively, abandon the fixed exchange rate.
However, this would only lead to a rapid depreciation of the pound.
George stared at the globe.
His gaze lingered between Country Y and Country D.
George had already seen and heard about the situation in both countries.
The astute George realized that if Country Y wanted to protect itself, it had no choice but to abandon the fixed exchange rate.
As a result, the pound sterling will inevitably depreciate significantly.
"This opportunity is simply a gift from heaven. If I choose to short the pound now, how much profit could I make?"
George muttered to himself, a wild smile creeping up his face.
......
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