Waging Financial War
The United States is no stranger to waging financial
warfare, observes David Katz. What’s different now, however, is its
unique position within global financial markets. It’s enabling
Washington to project power in cutting edge ways.
This article was originally published in the Strategic Studies Institute journal, Parameters, Winter 2013-14.
Imagine warfare waged in financial cyberspace: electronic, remote,
fought in hypervelocity with millions of engagements per second, and
with nations forced to construct redundant systems, sacrificing billions
in economic efficiency for survival capacity. Financial warfare strikes
can blockade vital industries; delink countries from the global
marketplace; bankrupt sovereign economies in the space of a few days,
and cause mass exoduses, starvation, riots, and regime change.
Financial warfare can support US policy objectives by attacking
regime elites, collapsing trade, draining foreign currency reserves,
decreasing economic production, spiking inflation, driving unemployment,
increasing social and labor unrest and accelerating population
migration. Financial warfare can assist the warfighter by halting an
enemy’s capability to produce and distribute war materials, fund
training, operations, or proxies. Financial warfare can amplify and
accelerate the damage inflicted by economic warfare. Financial warfare
spoofing operations can assist intelligence collection by isolating and
mapping crisis response patterns of individual adversaries,
organizations, nations, and regime elites.
The aim of financial warfare is, quite literally, to disarm opponents
by reducing their ability to finance production or distribution,
complete transactions, or manage the consequences of a transaction
failure. If precisely employed, financial warfare can reduce a targeted
society’s will and cohesion by forcing upon it, in stark terms, the
daily necessity to choose between “guns” or “butter.” This dilemma
highlights and magnifies the real, immediate, and personal consequences
of resource allocation. Deployed within an indigenous society’s
political framework, financial warfare can deepen the divide between
rival constituencies, reducing societal cohesion and inciting civil
unrest.
Financial warfare is not a new concept. While many individual policy
actions had financial aspects, perhaps the first pure financial warfare
campaign in United States history occurred in the Eisenhower
administration. It was prompted by the Soviet invasion and suppression
of the Hungary Revolution on 4 November 1956 and sparked by the seizure
of the Suez canal by NATO allies, Britain and France, in Operation
Musketeer on 5 November.[1] President Dwight Eisenhower determined he
could not effectively oppose Soviet military intervention in Hungary,
while allowing European military intervention in Egypt.[2] Diplomacy had
not convinced the British or the French to withdraw.[3] The United
States was hesitant to intervene with military force against NATO
allies. As an alternative, Eisenhower employed financial warfare. With
just three offensive strikes, the United States achieved its immediate
policy aims of forcing Britain and then France to withdraw from the Suez
Canal. The three financial warfare strikes were: (1) blocking the
International Monetary Fund (IMF) from providing Britain with $561
million in standby credit; (2) blocking the US Export-Import Bank from
extending $600 million in credit to Britain; and (3) threatening to dump
America’s holdings of pound-sterling bonds unless Great Britain
withdrew from the Suez.[4] The credit blockade froze Britain’s ability
to borrow and forced it back onto its negative cash flow, effectively
bankrupting it. The pound-sterling threat significantly raised the
perceived risk of dealing in British currency. That threat, if executed,
would have directly affected British ability to trade internationally.
By 1956, Britain was grossly overleveraged and dependent on further
international borrowing to maintain its standard of living. The United
States owned $3.75 billion in British debt as a result of the
Anglo-American Loan Agreement of 1945, while the entire foreign currency
reserve of Britain in October 1956 was equivalent to $2.2 billion.[5]
To finance its WW II efforts, Britain had borrowed extensively from
Commonwealth members and by 1945 owed roughly £14 billion, chiefly to
India, Argentina, and Egypt. Unable to repay in full, Britain froze the
principal balances in these accounts.
The sell-off of US-held pound-sterling bonds, if executed, would have
been catastrophic. The resulting increase of British currency in
circulation would have deflated the value of the pound-sterling. This
deflation would, in turn, have required Britain to drain its foreign
currency reserves to buy pound-sterling bonds to maintain its currency’s
parity against the US dollar. If it broke parity, and allowed the
devaluation of its currency, Britain would not have the purchasing power
or the foreign reserves to cover its food and energy imports.
Additionally, Commonwealth account holders would probably have withheld
further credit until all prior debts were settled. Without credit,
Britain would have faced a prolonged liquidity crisis and insolvency.
In his response to the Suez Crisis, Eisenhower waged a modern
financial warfare campaign. Without credit-fueled deficit spending,
Britain could not import needed oil and food. It would also have
destroyed Britain’s trade and its ability to form capital through trade
surpluses, and collapse its ability to import goods at a deficit to
maintain its standard of living. These financial strikes operated beyond
US legal jurisdiction and where informal US influence had failed.
Eisenhower’s actions were outside c onventional or irregular war.
Financial warfare thus supplanted traditional warfare in countering the
British and French seizure of the Suez Canal.
This Suez Crisis example illustrates the importance of understanding
the offensive capabilities and defensive necessities of financial
warfare. The United States successfully waged financial warfare against
the third most powerful nation on the planet at that time; it is likely
the United States will be targeted by financial warfare in the future.
What is Financial Warfare?
Historically, financial depredation has been at best a subsidiary
effect of economic warfare. That has changed. With the emergence of
integrated global financial markets, financial warfare has become a
viable, distinct, and independent means of projecting power. As Yale
Professor Paul Bracken explained: “The economic system deals with the
hard and soft outputs of the economy–that is, goods and services. The
financial system deals with money and credit.”[6] Accordingly, economic
warfare is circumscribed to attacks on the enemy’s ability to produce
and distribute goods and services; financial warfare is confined to
attacks on the credit and monetary foundations that underlie production
and distribution. Financial warfare is a potent means of power
projection because precluding a nation's ability to price and to
exchange; to form capital and manage risk; causes production and
distribution to cease. Without production and distribution, the economy
grinds to a halt and the adversary is dis-armed. Financial warfare thus
uses money and credit to attack (defend) an opponent (or a friend).
In practice, financial warfare identifies systemic areas of opacity,
agency and asymmetry in information, risk and reward; focuses on those
areas with a high relative degree of centralization and leverage; and
determines the ranges of integration and diversification that offer the
greatest susceptibility to contagion and cascade failure.[7] Offensive
financial warfare seeks to engineer outcomes from altering adversary
capabilities to creating “Black Swans,” which are large-scale events of
massive consequence that occur far from the means of statistical
distributions (fat-tailed events) and accordingly are unpredictable and
irregular.[8] Defensive financial warfare seeks to decentralize;
de-lever; reduce opacity, asymmetry, and skewness; or construct extra
capacity, strength, and layers of redundancy to negative outcomes. The
intent of financial warfare is to extend the strategic and tactical
engagement of the enemy from the kinetic battle space to the financial
marketplace. It engages an opponent’s financial structure, or
operations, by using the three principal functions of finance: capital
formation, capital liquidity, and risk-management:
•Capital formation is the accumulation of real capital surpluses
through public and private savings and borrowings to create or expand
future economic activity.
•Capital liquidity is the transaction of capital assets at volume,
rapidly without loss of value, between buyers and sellers and among its
forms, e.g., commodities to currencies, dollars to yen, stocks to bonds,
etc.
•Risk management is the process of optimizing exposure to financial volatility.[9]
Financial warfare engagements occur at both the tactical and
strategic levels. Tactical wins, losses, and draws must be used
coherently to advance strategy. In financial warfare, there is an added
dimension best articulated through the concept of micro and macro. A
micro financial engagement is the singular use of one functional avenue,
capital liquid-ity, capital formation, or risk management, to affect a
single transaction. Macro financial engagements typically occur at
system integration points between an adversary and the global,
bilateral, or multilateral markets. For example, terminating Protection
and Indemnity (P&I) insurance for one ship precludes its use for
hauling third party cargo internationally. This is a micro
risk-management engagement. Removing an entire country’s P&I
insurance uses a macro risk-management engagement to shut down a
nation’s international, commercial maritime cargo industry. The
difference lies in whether the exploitation of vulnerabilities is
individual or systemic, and whether the exploitation occurs within a
system or at the interface between systems.
If global finance is an inescapable component of global trade, then
its corollary—global financial warfare—is equally inescapable. Every
country involved in the global markets has, by necessity, harmonized in
some degree at both the micro and macro levels with global financial
standards and structures. These harmonized international standards are
vital to the proficient and efficient functioning of global trade,
which, in turn, is crucial to most national economies. The flipside of
that coin is that these harmonized standards offer avenues of approach
to wage financial war.
Waging Financial War
The recent and enormous growth of global financial markets
illustrates the reach of purely financial actions. For example, the
average daily turnover in the foreign currency exchange markets (Forex)
is over $4 trillion.[10] As such, the Forex daily turnover is greater
than the annual domestic product of 215 of the world’s 220
countries.[11] Financial warfare’s capabilities and impact will only
increase as global financial markets grow. With its high-speed, complex
interconnectivity, and the volume of capital moving daily, warfare in
the financial marketplace possesses the capability to operate separately
from and at speeds far beyond economic, conventional, or irregular
warfare.
The United States possesses a discrete and immense capacity for
financial warfare. As the provider and guarantor of the world’s reserve
currency, the United States occupies a unique position in global
financial markets. The reach of US currency is global. The Federal
Reserve estimated that 60 percent of total US currency in circulation,
roughly $450 billion, is held outside the United States.[12]
Accordingly, the United States is the preeminent market for raising as
well as investing capital. By 2010, foreign borrowers had $2.1 trillion
in debt outstanding from US sources.[13] In the period 2003 to 2007, 55
percent of all highly rated US securities, treasuries, agencies, and
AAA-rated private debt issued, $4.5 trillion, were purchased by foreign
entities.[14]
From a policy perspective, financial warfare makes sense because it
makes policy options available through finance that were previously
obtainable solely through armed force; for example, these options could
include ending effective and efficient Saudi financial support to
inter-national jihad; reducing Iranian defensive capability; and
constraining Chinese economic penetration into Africa.
For uniformed military leaders, preparation of the battlespace now
includes informational, cyber, economic, and financial actions. War
plans can and should substitute financial-based risk for manpower-based
risk when more efficient or effective. For example, uniformed military
leaders may consider the use of structured analytics like Critical
Factors Analysis (CFA) to identify the centers of an adversary’s
defensive capabilities and target them as well as supporting components
of the adversary’s military-industrial base with financial strikes prior
to air-strikes. The warfighter now has the choice whether to bankrupt,
bomb, or both. Lastly, commanders in Unconventional Warfare (UW) and
Stability Operations (SO) wield enormous financial clout within their
area of operations. They must use financial warfare to erode adversary
capacity, build capacity of adversary competitors, and ensure that
benefits of association with the United States only flow to indigenous
parties who actively share risk, comparable in intensity and duration,
with the United States. To neglect the use of some US capabilities in
execution of policy is to overuse, rely on, and risk other capabilities.
If the intent of financial warfare is to extend the battlespace into
the financial marketplace, then the operational question becomes how to
do it? The answer is through macro and micro engagements or strikes
across the three principal areas of finance initially targeting the
interface between the adversary and the global marketplace.
Capital Formation Strikes
Inflating or deflating an adversary’s currency, or any medium used to
store real capital surpluses, is one way to conduct a capital formation
strike. A prior requirement for successfully attacking an adversary’s
capital formation capability is to map how he moves capital and where he
aggregates it. This mapping provides, in both broad manner and at a
precise point, the adversary’s current financial capacity for funding
military, paramilitary, or proxy operations, as well as providing
significant intelligence on their war-sustainment capability. Feints and
spoofing operations can provide insight on how and where an adversary
forms capital normally and under duress, as well as uncovering potential
targets.
Capital formation strikes encompass the physical, cyber, and
informational. Physical strikes can range from general to selective
attacks against the telecommunications infrastructure which facilitate
financial information flow. For example, interdicting the automated
teller machine (ATM) communications system could preclude interbranch
and interbank retail capital formation. Capital formation strikes can
target and delegitimize the investment sponsor, the investment, or those
channels used to evaluate, price, transact, and own it. Strikes
directed against a channel itself can be used to deter, retard, or
preclude the use of that channel by the investment or its sponsor.
Capital Liquidity Strikes
Capital market liquidity, for example, is systematic aggregation of
capital transactions which are the individual exchange of capital and
financial assets between buyers and sellers at volume, rapidly, without
loss of value, and among its forms, e.g., commodities, currencies,
equity, debt, etc. Deconstructing or reversing the historic arc of
capital market liquidity’s upward progress is a blueprint for
systematically waging financial warfare utilizing capital liquidity
strikes. The intent of capital market liquidity strikes, in aggregate,
is to target markets and disrupt their drivers of upward efficiencies,
speed, volume, and scale, to create a downward spiral of inefficiencies
driving markets to a measurable policy objective or collapse. The
separation between macro and micro in capital liquidity strikes mirrors
that of capital formation. Macro capital liquidity strikes target
markets. Micro capital liquidity strikes target individual transactions.
Micro capital liquidity strikes directed at a specific transaction
can include: precluding a buyer from meeting a seller; interfering with
or spoofing that transaction’s price; preventing title transfer;
breaching legitimate market behaviors, or introducing unwarranted
regulatory requirements into a specific transaction. Macro capital
liquidity strikes can target market capabilities such as transaction
speed. Transaction speed is limited by the speed at which information
flows through market channels. Reduce channel speed and transaction
speed will accordingly reduce. Reduce transaction speed and market
throughput will reduce. Likewise, market consistency, transparency and
uniformity can be targeted through discrete strikes reducing channel
speeds only for specific buyers. When the bid ask spreads are small,
discrete channel speed reductions may preclude specified buyers and
sellers from transacting within a timeframe available to other market
participants. The targeted buyer loses the transaction to other, faster
buyers. Eventually, targeted buyers exit, eroding trust in the market’s
fairness. Trust underlies every market. Erode trust and participants
will exit. The competitive margins between markets are typically thin.
Affect those margins and disadvantaged participants will exit to seek
other, more consistent, transparent, and uniform markets. Additionally,
spoofing market participants or deliberately implanting misinformation
can attack market transparency, consistency, and the uniform diffusion
of data.
Risk Management Strikes
Risk management is the process of optimizing exposure to financial
volatility.[15] Providers or facilitators of risk management include
insurance companies, audit and accounting firms, rating agencies and
credit bureaus, and underwriters of collateral, warranties, and hedges.
Removal or reduction of an adversary’s financial risk management
activities can constrain its ability to project power at the granular
level (micro) or comprehensively at a systemic level (macro). Eroding or
interdicting specific financial risk management mechanisms among
adversaries and their commercial enablers can delay or preclude their
ability to produce and distribute war materials, project power
internationally, support foreign operations or favorably prepare their
battlespace through commercial means.
For example, Iran’s crude oil sales accounts for 80 percent of Iran’s
hard currency reserves and for 50 percent of its national budget.[16] ,
Iran’s continued ability to ship oil, a strategic commodity, to Asia
gives it significant economic and diplomatic leverage as well as the
financial means to support military operations. However, Iran’s ability
to ship crude, and for that matter to maintain shipping overall, is
dependent upon maritime insurance. Without 3rd party Protection and
Indemnity (P&I) insurance, ships cannot enter most international
commercial ports. On February 18, 2011, “Iran’s biggest crude oil tanker
operator NITC said on Friday its ship insurers had declined to renew
policy cover for the coming year due to the impact of tightening
sanctions in the European Union.”[17] The ability to disaggregate Iran
from the global oil market by using a simple risk-management mechanism,
in this case P&I insurance, illustrates the leverage financial
warfare offers.
International maritime P&I insurance requirements illustrate an
interesting and under-appreciated aspect of financial risk management
strikes. Financial risk management strikes can utilize established
international regulatory schemas to attack adversary financial systems,
components, or assets. Lacking P&I insurance, adversary commercial
shipping fleets are precluded from many international ports. Insurance
and credit problems can also attack the international operations of an
adversary’s commercial airline industry. Macro risk management strikes
can utilize existing safety codes or operating rules to discover
fraudulent behaviors or uncover systemic violations of international
commerce standards by an adversary or their commercial enablers.
Weaponizing and exploiting international commerce schemas can result in
delinking entire industries from global trade. For example, increasing
ramp inspections or targeting operating audits at adversary commercial
enablers could discover violations of safety standards. Many
international commercial systems, maritime, aviation, postal, etc.
require and enforce safety and behavior standards, particularly where
fraudulent behaviors can collapse the system. International commerce
rule schemas can legitimately be used to limit or bankrupt an
adversary’s commercial enablers.
Lastly, on a cautionary note, just as the United States used
financial warfare to alter British policy in the Suez, financial warfare
may be used against the United States in the future. American
vulnerability to financial strikes includes interruptions to highly
centralized capital formation chokepoints like the Fedwire Funds Service
and the Clearing House Interbank Payment System (CHIPS) which account
for more than 858,000 daily interbank transactions totaling $973
trillion annually.[18] Levered derivative US financial products
introduce vulnerabilities when risk is opaque and agency problems exist,
as illustrated by the role Credit Default Swaps (CDS) played in the
2008 Mortgage Backed Security (MBS) collapse.[19] The result was
bankruptcy and liquidation of major securities as insurance firms
induced federal intervention to subsidize failed corporations.
Ironically, the whole financial system became less robust rather than
more robust. Lastly, deficit fueled (levered) federal spending increases
vulnerability to financial strikes across the board by reducing
capacity for managing negative outcomes such as errors in forecasting
future revenues, constraining current policy due to undercapitalized
past actions, and may incent actions such as nationalization of pension
assets, forced loans to the government, or currency devaluations.[20]
Financial warfare is a new means of power projection that offers the
United States significant capabilities in addition to its traditional
repertoire. Financial warfare can support US policy objectives by
directly attacking an adversary’s sovereign financial structures,
individual regime elites, or commercial industries and enablers.
Financial warfare spoofing operations can assist intelligence collection
through isolating, illustrating, and mapping adversary crisis response
patterns. Employing financial warfare strikes within an indigenous
society’s political frame-work can provide leverage assisting the
warfighter by reducing the enemy’s capability to fund training,
operations, or proxies. Lastly, with significant budget deficits and
mounting national debt, the United States is highly susceptible to, and
must consider study and defensive application of, financial warfare.
--
1. Malcom Byrne, Csaba Békés, János Rainer, eds. The 1956 Hungarian Revolution: A History in Documents, (New York, N.Y., Central European University Press, 2002): 1, http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB76/
2. Peter L. Hahn, “Significant Events in U.S. Foreign Relations: 1900-2001,” EJournalUSA (Washington,
D.C.: US Department of State, 2006): 26-30,
www.america.gov/media/pdf/ejs/ijpe0406.pdf; “Interview with General
Andrew J. Goodpaster,” George Washington University’s National Security
Archive,
http://www.gwu.edu/~nsarchiv/coldwar/interviews/episode-8/goodpaster1.html.
Eisenhower’s aide, General Andrew Goodpaster, recalled that
Eisenhower’s staff thought NATO could not present a united front to
Soviet aggression in Hungary while Britain and France were occupying
Suez; Byrne and Békés, Hungarian Revolution.
3. “Memorandum of a Conference with the President, White House,
Washington, October 29, 1956, 7:15 PM,” Office of the Historian, US
Department of State,
http://history.state.gov/historicaldocuments/frus1955-57v16/d411;
“Message from President Eisenhower to Prime Minister Eden,” US
Department of State, Office of the Historian, Washington, October 30,
1956, http://history.state.gov/historicaldocuments/frus1955-57v16/d436;
4. James M. Boughton, “Was Suez in 1956 the First Financial Crisis of the Twenty-First Century?” Finance and Development 38, no. 3 (September 2001): 1, http://www.imf.org/external/pubs/ft/fandd/2001/09/boughton.htm; Rose McDermott, Risk Taking in International Politics (Ann Arbor, MI: University of Michigan Press, 2001), 162, http://www.press.umich.edu/pdf/0472108670-06.pdf.
5. Nicholas Miller Trebatk, “The United States, Britain and the
Marshall Plan: An analysis of Anglo-American relations in the early
postwar era,” Paper presented at XII Conference on Contemporary
Capitalism and the National and Political Economy of Brazil and Latin
America on Contradictions and Perspectives, Rio de Janeiro, Brazil,
2007. The author was a doctoral student at the Instituto de Economia,
Universidade Federal do Rio de Janeiro (IE-UFRJ); Adam Klug and Gregor
W. Smith, “Suez and Sterling, 1956,” Working Paper No. 1256 (Kingston,
Ontario, Canada: Queen’s University Economics Department, 2nd Quarter,
1999), Figure 3: Britain’s reserves: 36,
http://www.econ.queensu.ca/working_papers/papers/qed_wp_1256.pdf
6. Paul Bracken, “Financial Warfare,” Foreign Policy Research Institute (2007):
4, http://www.fpri.org/enotes/200709.bracken.financialwarfare.html;Text
is paraphrased from “Financial Warfare,” page 4. as originally
published in Orbis, Fall 2007 edition.
7. Constantine Sandis and Nassim Taleb, “The Skin in the Game Heuristic for Protection Against Tail Events,” Social Science Research Network,
July 30, 2013, 1,
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2298292 ; Nassim
Taleb, Antifragile: Things that Gain from Disorder (New York: Random
House, 2012); Matthew Elliot, Benjamin Golub, Matthew Jackson,
“Financial Networks and Contagion,” Social Science Research Network, January 1, 2013, 2-5, 16-26, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2175056
8. Sandis and Taleb, “The Skin in the Game Heuristic for Protection
Against Tail Events,” 1; for a more detailed explanation of “Black
Swans” see Nassim Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007).
9. Philippe Jorion, Value at Risk (New York, NY: McGraw Hill, 1997), 3-15.
10. Bank for International Settlements, “Triennial Central Bank
Survey of Foreign Exchange and Derivatives Market Activity in 2010 -
Final Results,” December 1, 2010, 6.
11. Central Intelligence Agency, 2011 World Factbook, “Country
Comparison: GDP (Purchasing Power Parity),”
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryCode=xx&rankAnchorRow=#xx
12. United States Department of the Treasury, The Federal Reserve
Board. “The Use and Counterfeiting of United States Currency Abroad,
Part 3, The Final Report to the Congress by the Secretary of the
Treasury, in consultation with the Advanced Counterfeit Deterrence
Steering Committee, pursuant to Section 807 of PL 104‑132,” September
2006, 4,
http://www.federalreserve.gov/boarddocs/rptcongress/counterfeit/default.htm
13. Board of Governors of the Federal Reserve System. “Z.1 Financial
Accounts of the United States, Flow of Funds, Balance Sheets, and
Integrated Macroeconomic Accounts, D3 Credit Market Debt Outstanding by
Sector,” (Washington, DC:The Federal Reserve Board, March 10, 2011), 9,
http://www.federalreserve.gov/releases/z1/current/z1.pdf
14. Ben S. Bernake et al., “International Capital Flows and the Returns to Safe Assets in the United States, 2003-2007,” Board of Governors of the Federal Reserve System, International Finance Discussion Papers, Number 1014 (Washington, DC: The Federal Reserve Board, February 2011), 8, http://www.federalreserve.gov/pubs/ifdp/2011/1014/ifdp1014.htm
15. Philippe Jorion, Value at Risk, 3 -15.
16. Kenneth Katzman, Iran Sanctions, Congressional Research Service, June 13, 2013, 53; “Iran Oil Exports Top 844mn Barrels,” PressTV.com. June 10, 2010, http://previous.presstv.com/detail.aspx?id=130736§ionid=351020102
17. “UPDATE 2-Sanctions Hit Iran’s NITC Ship Insurance Cover,” Reuters, February 18, 2011, http://af.reuters.com/article/energyOilNews/idAFLDE71H1ZC20110218?sp=true
18. Bank for International Settlements, “Payment, Clearing and Settlement Systems in the United States,” Committee on Payments Systems and Settlement Redbook 2012, January 2013, 487-490.
19. Michael Lewis, The Big Short: Inside the Doomsday Machine (New
York: W. W. Norton, 2010). The entire book chronicles how the opacity,
agency, and asymmetric nature of the CDS market came back to impact both
the writers of this form of insurance, chiefly AIG-FP, and the buyers
to include Bear Stearns, Lehman Brothers, Morgan Stanley, among others.
20. Nassim Taleb, Antifragile: Things That Gain from Disorder (New York: Random House, 2012); Alexei Barrionuevo, “Argentina Nationalizes $30 Billion in Private Pensions,” The New York Times, October 21, 2008, http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html?; Niall Ferguson, The Ascent of Money (New
York: Penguin Press, 2008), 69-73. The 15th century Italian city states
of Florence and Venice both required wealthy citizens to loan money
[Florence: Prestanze, Venice: Prestiti] to their respective governments;
Hiroko Tabuchi, “Joining Switzerland, Japan Acts to Ease Currency’s
Strength,” The New York Times, August 4, 2011. In 2010-2011,
Brazil, South Korea, Japan, and Switzerland all intervened to preclude
appreciation of their currencies in order to maintain exports.
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