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Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:01.24,0:00:04.68,Default,,0000,0000,0000,,Let's consider the topic \Nof safe-haven currencies.
Dialogue: 0,0:00:05.92,0:00:09.42,Default,,0000,0000,0000,,A safe-haven currency is one \Nwhich does well in bad times.
Dialogue: 0,0:00:09.45,0:00:11.92,Default,,0000,0000,0000,,So when the global economy \Nbecomes riskier
Dialogue: 0,0:00:11.92,0:00:13.44,Default,,0000,0000,0000,,or something bad happens,
Dialogue: 0,0:00:13.44,0:00:15.90,Default,,0000,0000,0000,,some currencies tend to appreciate
Dialogue: 0,0:00:15.90,0:00:19.05,Default,,0000,0000,0000,,because they are considered \Nsafe havens for investors.
Dialogue: 0,0:00:20.68,0:00:23.14,Default,,0000,0000,0000,,The classic example here is the US dollar.
Dialogue: 0,0:00:23.34,0:00:27.39,Default,,0000,0000,0000,,During the American\Nfinancial crisis of 2008-2009,
Dialogue: 0,0:00:27.39,0:00:30.75,Default,,0000,0000,0000,,a lot of really bad things happened\Nto the United States economy.
Dialogue: 0,0:00:30.82,0:00:33.31,Default,,0000,0000,0000,,Yet, oddly, at these exact same times,
Dialogue: 0,0:00:33.31,0:00:37.08,Default,,0000,0000,0000,,quite often the value of the US dollar\Nwould rise on world markets.
Dialogue: 0,0:00:37.42,0:00:41.42,Default,,0000,0000,0000,,This may seem counter-intuitive, \Nbut it's reflecting a safe-haven effect.
Dialogue: 0,0:00:41.62,0:00:43.85,Default,,0000,0000,0000,,People figure that \Nif things get really bad,
Dialogue: 0,0:00:43.85,0:00:47.49,Default,,0000,0000,0000,,well, a lot of different assets \Nand asset classes will be in trouble,
Dialogue: 0,0:00:47.49,0:00:48.71,Default,,0000,0000,0000,,and they ask themselves,
Dialogue: 0,0:00:48.71,0:00:51.69,Default,,0000,0000,0000,,"Well, which is actually the safest \Nof those remaining?"
Dialogue: 0,0:00:51.69,0:00:55.04,Default,,0000,0000,0000,,And the US dollar, actually, \Nin the minds of investors,
Dialogue: 0,0:00:55.04,0:00:56.76,Default,,0000,0000,0000,,does pretty well on that score.
Dialogue: 0,0:00:57.85,0:01:02.37,Default,,0000,0000,0000,,Another safe-haven currency,\Nvery frequently, is the Japanese yen.
Dialogue: 0,0:01:03.79,0:01:06.55,Default,,0000,0000,0000,,And another safe-haven currency \Nis the Swiss franc.
Dialogue: 0,0:01:06.66,0:01:11.70,Default,,0000,0000,0000,,Like Japan, Switzerland has a reputation\Nfor being a very sound and stable place.
Dialogue: 0,0:01:11.70,0:01:14.42,Default,,0000,0000,0000,,It's certainly perceived \Nas such by investors.
Dialogue: 0,0:01:14.58,0:01:16.53,Default,,0000,0000,0000,,So during bad or risky times,
Dialogue: 0,0:01:16.53,0:01:19.48,Default,,0000,0000,0000,,there's often an inflow of money \Ninto Switzerland
Dialogue: 0,0:01:19.48,0:01:22.07,Default,,0000,0000,0000,,and an appreciation of the Swiss franc.
Dialogue: 0,0:01:23.24,0:01:26.67,Default,,0000,0000,0000,,What are the factors behind \Nwhat might be a safe-haven currency?
Dialogue: 0,0:01:26.77,0:01:28.54,Default,,0000,0000,0000,,Well, there's some disagreement here,
Dialogue: 0,0:01:28.54,0:01:30.97,Default,,0000,0000,0000,,but overall some of\Nthose factors would include
Dialogue: 0,0:01:30.97,0:01:34.94,Default,,0000,0000,0000,,the long term stability \Nof purchasing power in that currency,
Dialogue: 0,0:01:34.94,0:01:37.99,Default,,0000,0000,0000,,the general geopolitical outlook \Nfor that country,
Dialogue: 0,0:01:38.12,0:01:41.59,Default,,0000,0000,0000,,its monetary and fiscal policies \Nand how good those are,
Dialogue: 0,0:01:41.88,0:01:43.92,Default,,0000,0000,0000,,the size and safety of the country;
Dialogue: 0,0:01:43.92,0:01:46.60,Default,,0000,0000,0000,,that's one factor \Nfavoring the United States;
Dialogue: 0,0:01:46.74,0:01:50.06,Default,,0000,0000,0000,,whether that country has \Na significant role in global trade
Dialogue: 0,0:01:50.35,0:01:53.45,Default,,0000,0000,0000,,including the use of that currency \Nas a reserve currency;
Dialogue: 0,0:01:53.45,0:01:56.38,Default,,0000,0000,0000,,that would probably be \Nrobust even in bad times.
Dialogue: 0,0:01:56.72,0:02:00.74,Default,,0000,0000,0000,,Quite important is the liquidity \Nof markets for that currency
Dialogue: 0,0:02:00.74,0:02:03.72,Default,,0000,0000,0000,,and, also, the net asset position \Nof the country;
Dialogue: 0,0:02:03.72,0:02:07.11,Default,,0000,0000,0000,,simply, how much wealth \Nhas that country accumulated
Dialogue: 0,0:02:07.21,0:02:09.78,Default,,0000,0000,0000,,relative to how much \Nit owes other parties.
Dialogue: 0,0:02:11.55,0:02:14.13,Default,,0000,0000,0000,,There are some other potential \Nsafe-haven current,
Dialogue: 0,0:02:14.13,0:02:15.98,Default,,0000,0000,0000,,sometimes, but not always cited.
Dialogue: 0,0:02:16.15,0:02:19.40,Default,,0000,0000,0000,,Those would include the euro, \Nsometimes, the Korean won,
Dialogue: 0,0:02:19.40,0:02:21.21,Default,,0000,0000,0000,,or even the Norwegian crown.
Dialogue: 0,0:02:21.21,0:02:23.12,Default,,0000,0000,0000,,If you go back to the previous list,
Dialogue: 0,0:02:23.12,0:02:28.14,Default,,0000,0000,0000,,you'll find that these are not nearly \Nas safe haven, at least as of 2013,
Dialogue: 0,0:02:28.14,0:02:32.28,Default,,0000,0000,0000,,as the US dollar, the Japanese yen,\Nand the Swiss franc.
Dialogue: 0,0:02:33.80,0:02:37.07,Default,,0000,0000,0000,,It might sound like a good thing\Nto be holding a safe-haven currency,
Dialogue: 0,0:02:37.07,0:02:40.39,Default,,0000,0000,0000,,well, maybe it is because, in bad times,\Nit gives you more protection;
Dialogue: 0,0:02:40.39,0:02:41.91,Default,,0000,0000,0000,,that's a kind of insurance.
Dialogue: 0,0:02:41.91,0:02:45.45,Default,,0000,0000,0000,,But, keep in mind, there's always \Ntrade-offs in economic activity.
Dialogue: 0,0:02:45.65,0:02:49.24,Default,,0000,0000,0000,,So a currency which is giving you\Nmore insurance protection upfront
Dialogue: 0,0:02:49.24,0:02:53.12,Default,,0000,0000,0000,,is probably paying you,\Nall other things equal, lower returns.
Dialogue: 0,0:02:53.45,0:02:54.94,Default,,0000,0000,0000,,So, just keep this in mind,
Dialogue: 0,0:02:54.94,0:02:57.48,Default,,0000,0000,0000,,there is a trade-off \Nbetween risk and return
Dialogue: 0,0:02:57.48,0:03:01.65,Default,,0000,0000,0000,,when considering the costs and benefits\Nof holding safe-haven currencies.
Dialogue: 0,0:03:02.72,0:03:04.94,Default,,0000,0000,0000,,For more on this topic,\Nthe best place to start
Dialogue: 0,0:03:04.94,0:03:08.02,Default,,0000,0000,0000,,is simply to put \N"safe-haven currency" into Google
Dialogue: 0,0:03:08.02,0:03:11.07,Default,,0000,0000,0000,,and also into scholar.google.com.