What Is A Hotline?

　　 hot money Also known as Hot money Or speculative short-term capital, which is not clearly defined by the government at present, but usually refers to the short term capital that flows rapidly for the purpose of speculation, and it is easy to induce the market even in and out. Finance Turbulence.

Hot money is mainly invested in foreign exchange, stock and its derivatives market. It has the characteristics of strong speculation, fast liquidity, and strong concealment.

The emergence and expansion of hot money are caused by many factors. First of all, in 70s and 80s twentieth Century, some countries began to relax financial control, cancel the restrictions on capital inflow and outflow, and make the formation of hot money possible. Secondly, the new technological revolution has accelerated the spread of financial information throughout the world, greatly reduced the allocation cost of capital in the world, and increased the speed of capital flow. Thirdly, financial innovations represented by forward foreign exchange, currency swap and interest rate swap, forward interest rate agreement and floating rate bonds provide new investment varieties and channels for hot money. These factors speeded up the globalization process of financial market, and increased the total amount of global international capital flows, and the scale and influence of hot money also increased.

Given the characteristics of hot money, how to identify and determine its size is not easy. Basically all the methods of measuring the scale of hot money are based on the balance of payments. Therefore, a thorough understanding of the structure of the balance of payments is an important prerequisite for the accurate estimation of the scale of hot money. However, some experts pointed out that hot money is not static. Some long-term capital can also be converted into short-term capital under certain circumstances. Short term capital can be transformed into hot money. The key lies in whether the economic and financial environment will lead to investment from capital to speculation.

Hot money is an important source of global financial market turbulence and even financial crisis. Whether in the Mexico financial crisis in 1994 or in the Southeast Asian financial crisis in 1997, hot money played a role.