The Need for Futures Markets in Currencies

Under the system of rigidly fixed rates that do not change — the ideal envisioned by some supporters of Bretton Woods — there is only limited room or need for a broad, resilient public futures market in currencies. The central banks plus the large commercial banks can readily provide the need. Under a system of rigidly fixed rates subject to large jumps from time to time — the Bretton Woods system in practice — there is great need for a futures market in currencies to permit foreign traders and investors to hedge against the occasional large changes that will occur. But it is almost impossible for such a market to exist because most of the time there is little for it to do, and when there is a role for it, the speculation is one-sided