The Gnomes of Zurich Play in the Largest Market in the World

Robert Z. Aliber
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Robert Z. Aliber: University of Chicago

Chapter 4 in The New International Money Game, 2011, pp 51-64 from Palgrave Macmillan

Abstract: Abstract The ‘Gnomes of Zurich’ is a tag for traders that seek profits from ‘bringing down national currencies.’ Their gains would be at the public expense; the view was that the Gnomes caused currency values to differ from both those that the local political leaders thought appropriate and those that were consistent with the ‘economic fundamentals’ — whatever that means. The term became fashionable in the late 1960s when the British pound was overvalued; the transactions of the Gnomes advanced the date of the devaluation that was inevitable and that the British authorities were attempting to forestall.

Keywords: Central Bank; Foreign Exchange; Exchange Market; Hedge Fund; Foreign Exchange Market (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-24672-0_5

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DOI: 10.1057/9780230246720_5

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