Was Cyprus the canary in the coal mine?

A cautionary tale on making sure you know how safe your money is...in any market.

This crisis harshly impacted the world of currency trading, yet the source of the problem had nothing to do with this investing medium. The forex community is in a tailspin, trying to repair its tarnished image. Clients are shifting allegiances right and left, and chaos prevails. The sad truth, however, is that this type of risk could have impacted any type of brokerage house on the planet. It is not unique to foreign exchange.

In this modern era of globalization, capital easily can flow to all corners of the globe. Investing across national borders is more prevalent today than ever before. It was not that long ago that a 5% or 10% benchmark was suggested for overseas investment forays, but these figures have trebled in recent years.

IMF Global Growth

Emerging and developing economies are growing at twice to three times the rate experienced in the advanced economies of the world. Profit may not always follow growth, but investors have stampeded overseas to test that hypothesis.

The primary issue, however, is whether your broker has installed the financial disciplines and best practices to protect you from account seizure by foreign officials. The time has come to ask a few penetrating questions of your broker.

 

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About the Author
Tom Cleveland

Tom Cleveland has accumlated over 30 years of experience within the international payments industry. From 1980 until 1999, Tom served as CFO for various Visa International entities, retiring as Group EVP and treasurer. His most notable work includes expanding the global reach of the Visa system, building the necessary financial and settlement infrastructure to support that growth, designing and deploying global risk management processes, and securing necessary regulatory approvals for existing operating standards. Also stemming in 1980, Mr. Cleveland began researching economics and investments and has been commentating about forex since 2009. Mr. Cleveland can be reached at tgcleveland@gmail.com and his instructional forex broker review can be found at forextraders.com.

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