Technology, research and development, capital, and economic growth merge into the lexicon of the company of the future. Economic globalization has been dynamized by the profound revolution of technological progress. Telecommunications, as a vehicle for information and data, move capital and unify the financial world. Companies unite in economic groups through strategic alliances to face competitiveness and face the transnationality (cross-border) of the markets. The outsourcing of the economy has led entrepreneurs to come up with innovative technological tools that allow them to keep up with the competition and, in the best of cases, take the lead.

 

  1. CAPITAL AND THE MACHINE

The global economy is characterized by free trade in goods, services and the free movement of capital. Interest rates, exchange rates, and stock prices in various countries are directly related to global financial markets, exerting a great influence on economic conditions. The preponderant role played by international financial capital in the development of countries allows one to speak of a global capitalist system.

The system is made up of a center and a periphery, where the center is the provider of capital and the periphery is the client of capital. The rules of the game are in favor of the center, international monetary policy is designed and imposed there. It could be said that the center is in New York and London, because the international financial markets are located there, or in Washington, Frankfurt, and Tokyo because the world’s money supply is defined there. The monetary capital is located in the most important cities in the world, as a symbol of its development and power, all this movement includes the stock markets, which use new information technologies, such as the ICB[1].

COUNTRY STOCK MARKET INDICATOR WORTH BEHAVIOR PERCENTAGE CHANGE
Spain IGBM 1099.54 -10.61 -0.96%
USA Dow Jones 11048.11 +112.00 +1.02%
USA Nasdaq (High Tech) [2] 4673.96 -159.93 -3.31%
USA S&P 1512.89 +5.16 +0.34%
United Kingdom FTSE 100 6598.8 -51.3 -0.77%
Germany DAX 7864.76 -67.17 -0.85%
Argentina MerVal 584,390 -4,540 -0.77%
Brazil Bovespa 18033.23 -304.67 -1.66%
China Shanghai 1788,807 -2,634 -0.15%
France ACC 6505.48 -18.82 -0.29%
Holland AEX 682.73 -5.21 -0.76%
Hong Kong hang seng 18096.37 -205.32 -1.12%
Italy MIBTEL 32602 -63 -0.19%
Japan nikkei 20706.65 +332.31 +1.63%
Mexico CPI 7878.720 -73,480 -0.92%
Venezuela IBC 5591.46 -124.32 -2.18%

Table prepared by the author with data from March 29, 2000.

Capital generates multiple benefits, increasing and improving productivity, and driving financial innovations. Each country designs attractive conditions by competing to attract, retain and exploit capital, which is non-territorial, making it easier for it to move in the direction that best suits it. This global capitalist system is not recent, nor is it even novel.

From a technical point of view, the birth of capitalism and the change from a barter economy to a money economy with an international credit structure has led to the generalization of abstract symbols of wealth: banknotes, checks, and valuable papers. and the numbers. This had its origins in northern Italy, particularly Florence and Venice, in the 14th century; two hundred years later there was an International Stock Exchange in Antwerp dedicated to helping speculators in transport from foreign ports. In the mid-16th century double-entry bookkeeping, bills of exchange, and speculation in “futures” developed into a modern form.

The capital currency arose hand in hand with the creation of the machine, bringing new habits to the life of man, it took people from the tangible commodities to the intangible of the ledger, to non-commodities and futures trading. Time became money, and money became power, and as a social leveler power demanded increased production in factories and the promotion of trade, generating capital for wars and conquests in foreign lands, opening paths for international business.

Meanwhile, the field of technology took its journey, from the time man discovered fire and its applications in ovens for his homes before the 10th century, the decimal system in the year 1080, the University of Bologna in the year 1100, the magnetic compass in the year 1195, the paper mill in the year 1390, the modern printing press in the year 1440, the inventions of Leonardo da Vinci from 1472 to 1519 – among which are the centrifugal pump, the dredger for construction of channels, rifled firearms, link chains, the submarine boat, the endless screw, the parachute, the lamp tube and the construction of standardized houses, among others of equal relevance.

The first portable clock was invented in the year 1500, the fire engine in the year 1518, modern surgery in the year 1545; then came the logarithms in the year 1614, the tile-making machine in the year 1619, the periscope in the year 1637, and the differential calculus in the year 1680; The machinery used in mining and the textile sector was rapidly perfected, the sewing machine was invented in 1711, the typewriter in 1714, the cement factory in 1756, canned food in the year 1795, the manufacture of bleaching powder in the year 1799; there were great advances in energy conversion, scale production of textiles, the iron, steel, and machinery, it was also the era of railway construction. The galvanic cell was invented in the year 1800, the first patent for the automobile was in the year 1807, elevators in the year 1830, pneumatic wheels in the year 1845, the London science museum in the year 1853,

In 1903, the radiotelephone was invented, the first airplane piloted by a man, and the German museum opened its doors; vitamins were invented in 1912, and radio-television in 1927.

But as for the main tool for managing information in financial innovation, it was developed between 1943 and 1946 at the University of Pennsylvania, weighed 30 tons, worked with vacuum tubes, and kept information on punched cards, it was the first generation of computers, the machine is known by the name of ENIAC –Electronic Numerator, Integrator, Analyzer, and Computer–. Then in 1947, the transistor was invented and the progress of computers reached the second generation, until developing lighter and cheaper machines in the world of computer engineering. In 1974 the first personal computer in history arrived, called the MITS Altair 8800, followed by the Apple I and II, the Commodore PET, and the one that would finally prevail over the others in 1981: the IBM PC.

This wild race did not stop there, in 1982 Microsoft company launched the MS-DOS operating system for the IBM PC; in 1983, Sony launches double-sided, double-density 3.5-inch floppy disks, and in 1984 Steve Jobs launches the Macintosh. Everything could continue to evolve routinely if it weren’t for the DARPA program of the United States Department of Defense, which investigated technologies that would allow computers to connect: the Internet. In 1981, Tim Berners Lee, a scientist from CERN – European Center for Nuclear Research – created a hypertext system capable of organizing information on the Internet efficiently, called the World Wide Web – WWW -, this has allowed a military project becomes a means of communication for all uses,

Capitalism was consolidated, it became dominant in the 19th century hand in hand with technology, with the speed of communications as one of its strengths. Its indisputable novelty, the invention of telephony and telegraphy represented an acceleration in the 19th century until the development of computer communications today. International trade, the flow of capital, information, and entrepreneurship have given rise to what was previously thought to be the future: the competitive present.

Capital is the reason for changes in the socioeconomic environment, its mobility makes direct physical investment lose privilege, subject to taxes and national pressures. Moving a multinational factory is more expensive than moving international capital, which is now done electronically. Multinational companies enjoy flexibility and some guarantees from national governments in making investment decisions, but these advantages are not comparable to the freedom of choice enjoyed by international portfolio investors, who in turn can speculate in the market. The variety of opportunities is also facilitated by being at the center of the global economy instead of on the periphery, the powers know that they are providers, not customers or users.

Finance capital plays a dominant role in today’s world by influencing the financial markets of the global capitalist system. In times of crisis and uncertainty, capital tends to return to its place of origin, producing greater disturbances in the periphery than in the center. This is why economists say that when Wall Street catches a cold, the rest of the world catches pneumonia. In the case of the Asian crisis, the problems started in the periphery, but once Wall Street began to run, the withdrawal of funds from the periphery was overwhelming and, ultimately, fatal for its economy. Here the information systems did not operate early warnings for making decisions on time,

See also  Differences between spending and investment: Rehearsal

The free movement of capital is a recent phenomenon. At the end of the Second World War, economies were national, international trade was in the doldrums, and direct investment and financial transactions were at a standstill. The Bretton Woods institutions – IMF [3] and WB [4] – were created to promote international trade in the absence of international capital movements. The WB was conceived to compensate for the lack of direct investment; the IMF, the lack of financial credit to reduce trade imbalances.

In this sense, international capital in underdeveloped countries was oriented towards the exploitation of natural resources without defining policies to increase foreign investment, they tried to expropriate it, and this was taken advantage of by American companies, which moved to Europe, and later to the rest of the world. Many key industries, such as pharmaceuticals, automobiles, and computers, came to be dominated by large multinational companies. Thus, international financial markets took longer to develop, also because many national currencies were not convertible and countries maintained controls on capital transactions. In this sense, the stock markets were gaining greater power in the market as benchmarks for investing in companies according to their variations.

The Wall Street Journal
Section: Markets and finance.

US markets entered Wednesday’s session with mixed trends. On the one hand, the Dow Jones Industrial Average recovered from the falls of the previous day and just over an hour after the opening it gained 76.40 points to stand at 11,012.51, just one year after the barrier was passed. of the 10,000. For the last two months, however, the Dow has been struggling to establish itself solidly above 11,000. The same fate followed the S&P 500, which rose 6.81 points, reaching 1,514.54 points at that time. The technological values, however, due to the recommendation in the previous day of the head of investment strategy of Goldman Sachs to get rid of these investments, are seeing sales continue. The Nasdaq lost 59.77 points, 1.24%, to settle at 4,774,

March 29, 2000

Financial innovation was stimulated by crises. In 1970, the oil-producing countries formed the Union of Petroleum Exporting Countries –OPEC-, and raised the price of crude oil. Oil exporters enjoyed large surpluses while importing countries had to finance large deficits. The responsibility for financing the funds fell to the commercial banks with the encouragement of Western governments.

Eurodollars were invented as a reference for the currencies of the nascent European Economic Community, now the European Union, and large offshore markets developed. The international loan boom plunged the world into a recession and international debt crisis in 1982, it took several years for the world economy to recover. In Latin America, there is talk of the lost decade. After the 1982 crisis, it was thought that the excess of loans was not going to be repeated; However, it happened again in Mexico in 1994 and in the Asian crisis of 1997, this shows that countries forget their ability to borrow, all to access international capital resources.

Analysis by the International Monetary Fund, taken from The Wall Street Journal
The International Monetary Fund expects Latin America’s gross domestic product to grow this year by 4.0% and for the region to register an inflation rate of 8.4%. The IMF also forecast a current account deficit of 2.7% of GDP in 2000, according to figures released at a press conference Fund officials held during the Inter-American Development Bank meeting in New Orleans. For 1999, Latin American GDP growth was 0.3% and the region registered an inflation rate of 9.6% and a current account deficit equivalent to 2.8% of GDP, he said.

March 29, 2000

  1. FROM PERSONAL RELATIONSHIPS TO BUSINESS TRANSACTIONS

The evolution of technology has responded to the needs of the human being, to his curiosity and creativity. Technological development has allowed the differentiation of countries by their degree of development and capacity to generate and optimize resources. For this reason, developed countries impose their conditions in terms of economic policy and international relations.

There has been an incremental transformation in international markets. Long-lasting, face-to-face relationships, where people meet before negotiating, have been replaced by commercial transactions. The business where owner and customer meet disappeared before the hypermarket and the Internet. National economies have been replaced by an international economy where products must meet world quality and price standards, customers are global and a new scenario has arisen: e-commerce (electronic commerce).

The substitution of relationships for transactions is a historical process, where each transaction has value in itself and investment banks compete for each piece of business. These transactions revolve around money, which is the unit of account, the medium of exchange, and the store of value to obtain goods and services. Social and moral values ​​are of little interest, embodying serious dangers for a transactional society where the individual loses his identity under the pressure of competition, he is only interested in winning or winning. Relationships where the word had commercial value have disappeared, responsibility, ethics, and honor, are values ​​that run the risk of disappearing under the weight of transactions.

  1. CREDIT IN THE FINANCIAL MARKETS

The scientific and technological revolution spreads based on the diffusion of information technologies derived from microelectronics and computing. The articulation and application of these technologies in the productive world postulate the existence of technological systems that contribute to the increase of productivity in the economic process, demanding investments in capital goods and pressuring companies to manage resources through indebtedness.

Great technological innovations require capital markets that facilitate their financing. Asian countries are reinventing their economies, such is the case of Malaysia and its capital Putrajaya with high-tech scenarios, the Multimedia University, and the MSC project -Multimedia Supercorridor- in which the great promoter and promoter of the initiative is the government itself with an investment of us$ 1,000 million in a financing fund for techno-entrepreneurs. Hong Kong has set aside $1.7 billion to build a Cyberport for high-tech companies. Taiwan is a leading PC manufacturer. Singapore is a hub for high-tech business and services, and even China is promoting a virtual manufacturing platform initiative.

All these initiatives require seeking capital internationally, so they must access credit. Money is directly connected to credit, but the role of credit is less well-known than the role of money. The credit is issued after circumstantial or other evidence of the solvency and value of the guarantee, given to the creditor; for this reason, it is said that it is lent to those who show that they do not need it. Access to international credit plays an important role in the economic growth of domestic economies. The borrowing capacity greatly enhances the profitability of investments. The expected rate of return is usually higher than the risk-free interest rate to justify the investment and to seek a profit margin on borrowing.

International credit is unstable because it is not well regulated like domestic credit in developed countries. Since the birth of capitalism, there have been periodic financial crises with devastating consequences. To prevent their repetition, banks, and financial markets have been subjected to regulations that have dealt with the last crisis and not the next so each new crisis has led to another advance in regulations. International credit works at convenience taking into account political, economic, and social aspects. The weaker the interested country appears, the greater the guarantees it must present unless it is convenient for other reasons to grant it credit in unfavorable situations.

Credit is part of the complex world of financial innovation, generating mutations in products, processes, and services, seeking an effective response to the crisis conditions that have characterized the international economy. The support provided by new technologies has fundamentally contributed to this.

The new generations of computers, telematics, and integrated payment and communication systems, together with paperless contracting, through computerized records, have revolutionized the new environment of international finance. The Swift I and II, Talismán, and Globex systems, used by the monopoly of risk rating agencies, are proof of the innovative capacity and high financial technification, as far as credit analysis is concerned.

  1. FINANCIAL INNOVATION IN THE INTERNATIONAL FIELD

Financial innovation is considered the strategic response of the markets to reduce their operating costs, business management, and risk, making available to investors the flows of funds in the national and international environments, here arises again the premise of innovating or disappearing.

Applying the technology life cycle curve, which is divided into four phases: emerging, growth, maturity, and decline, where each one has its respective assigned time according to the type of product, the life cycle of financial products is short, they have a rapid tendency to obsolescence due to the cascading effect of innovations, which were derived from the international financial crises. The supply and demand of financial products have led companies to analyze in detail their financial needs, which have been classified by the international banking regulation report or “Cross Report” in 1986, in the following simplified way:

  • Need for ongoing risk transfer: Variations in interest and exchange rates are controlled through reviewable loan techniques; contracts to hedge risks through swaps; forward contracts such as options.
  • Need to transfer credit risk: Securities financing methods, which transfer the risk to the title holder; risk rating techniques or rating [5].
  • Need for increased liquidity of loans and investments: Innovations facilitate liquid, guaranteed, and efficient markets.
  • Need to access new funding resources: Multi-currency securities, swaps, and warrants [6].
  • Need to increase own funds and risk capital: Options Markets; creation of secondary markets for SMEs; international stock markets; venture capital strategies.

According to the previous classification, we can observe that these products can be easily spread from one financial segment to another, from which the so-called synthetic instruments or Synthetic Securities [7] are generated.

The international banking sector has shown special sensitivity to financial instruments. A large part of the operations designed in this field has been developed in the financial institutions themselves in a dynamic of diversification that is both competitive and unbridled.

Its main incentive resides in the design of hybrid operations that, offering new possibilities, are almost always located out of balance. This favors the banking strategy itself in its risk management as a service provided to customers.

The philosophy behind the futures and options markets is innovative, taking the Greek classics as a point of reference. Thales of Miletus, an expert in mathematics, pioneered option trading, acquiring the right to all the mills in the city from him in the hope of a good harvest. His forecasts came true and this generated significant benefits.

In the coming years, the American market and the Pacific markets will have strong competition with the European Union, which bases its policies on the European Community Futures and Options Exchanges -ECOFEX-, as the regulatory body for the community market.

Free markets – OTC [8] – offer other types of opportunities to companies, outside the framework of standardization and the guarantee of the Clearing House. Contracting tailored to the needs of the user faces liquidity difficulties and requires greater knowledge of the market.

The use of equally dangerous derivative instruments is widespread in money markets, but nothing has been done to discourage them. For example, knock-out options are canceled when a certain price limit is reached, leaving the option buyer uninsured. Knock-out options used to be very popular with Japanese exporters because they are cheaper than normal ones. Generally speaking, there are no margin requirements for derivatives, swaps, and forward transactions, except when executed on registered exchanges.

Financial innovation is considered one of the main benefits of free markets, but since financial markets are unstable, financial innovations may be creating instability. Innovations bring intellectual excitement and benefits for innovators, but maintaining stability by preventing excesses must be a priority.

The global capitalist system, according to economist George Soros, is like a gigantic circulatory system, sucking in capital from markets and financial institutions at the center and pumping it to the periphery, either directly in the form of credit and portfolio investment or indirectly through multinational companies. According to the above, the Asian financial crisis has reversed the direction of the natural movement, now the capital has started to flee the periphery.

The difficulties of the periphery cannot be good for the center, for three reasons according to Soros, 1999. Reason 1: The Russian crisis has exposed previously unaddressed shortcomings in the international banking system. In addition to their exposure on their balance sheets, banks enter into swaps, forward transactions, and derivative financial instrument transactions, among themselves and with their customers. These transactions are not reflected in the banks’ balance sheets. They are constantly adjusted to market value, that is, they are constantly revalued and any difference between cost and market is offset by cash transfers.

This is supposed to eliminate the risk of payment default. swap markets, Forward and derivative operations are very broad and the margins are very low. Transactions form a garland with many intermediaries, and each intermediary has an obligation to its counterparts without knowing who else is involved. Exposure to individual peers is limited by setting credit lines. This complex system was hit hard when the Russian banking system collapsed. Russian banks defaulted on their payment obligations, but Western banks stood by their customers. No way was found to offset the obligations of one bank with those of another. Many hedge funds and other speculative accounts suffered such huge losses that they had to be liquidated. A similar situation arose soon after when Malaysia deliberately closed its financial markets to foreigners, but the Singapore Monetary Authority, in collaboration with other central banks, acted without delay. Outstanding contracts were netted and losses were shared. Thus, a possible collapse of the system was avoided.

Second reason: The pain of the periphery is so intense that some countries have started to abandon the global capitalist system, or have fallen by the wayside. First Indonesia, then Russia, has suffered a complete crisis, but what has happened in Malaysia and to a lesser degree in Hong Kong may be worse. The crash in Indonesia and Russia was not sought, but Malaysia deliberately dropped out. This country managed to inflict considerable damage on foreign investors and speculators and was able to obtain some temporary relief. The relief comes from cutting interest rates and injecting the stock market by isolating the country from the outside world. The relief can only be temporary because the borders are porous, and money will leave the country illegally; the effects on the economy will be catastrophic. The measures taken by Malaysia will hurt other countries trying to keep their financial markets open because they will encourage capital flight. In this regard, Malaysia has embarked on the policy of getting rich at its neighbor’s expense.

Third reason: This factor that favors the disintegration of the global capitalist system is the evident incapacity of the international monetary authorities to hold it together. The IMF programs don’t seem to work, the IMF has run out of money. The G-7 response to the Russia crisis has been woefully inadequate, and the loss of control has been appalling.

The foregoing shows the need to rethink the strategy of international monetary entities, or to start a new path to strengthen the global capitalist system. The scenarios have changed, technology is advancing by giant steps and the response capacity of capital is falling short, affecting the companies that drive the economic development of each country. We are in a revolution in the financial sector in which the company must choose the instrument, the market, and the strategy that best suits its needs, to cover its risks, reduce its costs and maximize its profits.

Financial innovations have their peculiarities in terms of their structure, their operation, and even in the name. Let’s see some examples:

  • Tigers: Treasury Investment Growth Receipt, was created in 1982 by Merrill Lynch. They are bonds for coupons, qualified in English as Stripping [9].
  • Cats: Certificate of Accrual on Treasury Securities, created by the firm Salomon Brothers as financial obligation securities.
  • Lions: They are another variation of strips, created by the firm Lehman Brothers.
  • Zebras: Zero-coupon Eurosterling Bearer Registered Accruing Securities, created by SG Warburg, as financial obligations.
  • Stags: Sterling Transferable Accruing Government Securities.
  • Felin: State funds, free of nominal interest. Created by the French bank.
  • Hedge funds are involved in a wide range of investment activities. They serve sophisticated investors and are not subject to the regulations that apply to mutual funds. Managers are compensated based on performance and not as a fixed percentage of assets. Performance funds would be a more accurate definition.

The objective of these financial innovations is to respond to a need of the moment without taking into account its duration in time. There are also Swaps [10], Euronotes facilities [11], and Financial Futures, and Options, among others.

This complex set of financial innovations cannot ignore International Bonds, with which countries and companies also seek to solve themselves. They receive various names such as Yankee in the United States, Matador in Spain, Samurai in Japan, and Bulldog in the United Kingdom, among others.

 

CONCLUSIONS

The innovation introduces large elements of complexity and interdependence into the global financial system. The competitiveness of companies is based on the incorporation of technological progress into their business processes. R&D resources dedicated to the service sector must create learning processes through practice, and the use of complex systems or interaction (learning-by-doing, learning-by-using, learning-by-interacting).

There is a horizontal effect of information technologies, which support activities in the financial services sector.

With the technological revolution, changes occur in the institutions, in the modalities of organization of work in companies, which changes the concepts of organizational models, personal relationships, and commercial transactions.

In financial products, the technological cycle is shortened, and the flexibility to respond to demand is intensified with the development of new information technologies. This generates changes in competitive forces, motivating alliances between companies to stimulate technological synergies or to share core competences.

Financial innovation does not eliminate risk, it transfers, redistributes, and diversifies it, although it reduces individual risks. It can generate a faster progression of the leverage effect, raising unknowns about the application of monetary policy techniques.

The lessons of the global financial crises must be learned to avoid subsequent disasters, countries must protect themselves and measure their exposure to risk according to their indebtedness capacity and the production of internal resources.

The capitalist system should not be above the moral principles that govern society because it will deteriorate under its weight, even if they are commercial transactions, these are between institutions created and governed by people, who are part of a family and an environment that each time has to be humanized in favor of those who need it most.

BIBLIOGRAPHY

  • COSTA RAN, Luis and FONT VILALTA, Montserrat. New financial instruments in business strategy. 2nd ed. Madrid: ESIC, 1992. 531 p.
  • DUEÑAS SANCHEZ, Henry. Technological management in the university-company relationship. Thesis. Barcelona: UPC, 1999. 119 p.
  • MUNFORD, Lewis. Techniques and civilization. New York: Harcout, 1998. 552 p.
  • PORTER, Michael E. The competitive advantage of nations. Buenos Aires: Verlap, 1991. 1,025 p.

[1] Internet Commerce Broker -ICB-: One of the most used schemes is the Internet stockbroker, which collects supply and demand information, and executes purchases and sales through the network. This system is designed to sell information, carry out transactions and promote electronic commerce.

[2] The Nasdaq Stock Market ® announced a new system for the electronic display of quotes and purchase orders for securities listed on the Nasdaq. The Nasdaq WorkstationII ® (NWIITM) screen will be redesigned to include the new Nasdaq Order Viewing Feature or “Window” to increase transparency in the Nasdaq Stock Market. The proposal has been submitted to the Securities and Exchange Commission (SEC) for final approval.

“The Nasdaq Order View Window will strengthen Nasdaq ® ‘s position as the true central market for Nasdaq securities by improving the collection, aggregation and display of pre-trade information from both Market Makers of markets or counterparty companies) as well as Electronic Communication Networks (CERs),” says Frank G. Zarb, Chairman of the Board of Directors and CEO of the National Association of Securities Dealers, Inc. (NASD ® ) – parent entity of The Nasdaq Stock Market, Inc.

[3] IMF: International Monetary Fund

[4] WB: World Bank

[5] Rating: Financial rating of an entity in the opinion of specialized agencies. There are short-term or Commercial Paper and long-term ratings. Global monopolies and oligopolies begin to emerge. There are only four large auditing companies left in the world; a similar but less pronounced concentration takes place in other finance functions

[6] Warrant Bonds: option certificates –warrants- that grant the optional possibility of acquiring another asset under predetermined conditions, their price depends on the price of the asset in the market.

[7] Synthetic Securities: These are hybrid or combined financial instruments that allow trading an existing financial asset with a hedging transaction, such as interest rate swaps.

[8] OTC Markets – Over The Counter -: Market whose securities transactions are carried out outside the Stock Exchanges and Organized Securities Markets. Markets over the counter, without a physical location. They are also called Gré à Gré.

[9] Stripping: Position in a series of maturity dates in financial obligations.

[10] Swap: Liability obligation swap operation over time. A currency swap is an exchange of operations in different currencies with equivalent values. The interbank swap is the exchange of a forward currency for another spot.

[11] Euronotes facilities: they are issues of short-term securities, also called Euronotes, with maturities of one or two months, renewable through roll-over, and guaranteed in a Euro-credit called back-stop.