By entering in such contracts, customers could offset the risk that large movements in exchange rates could adversely impact the economic viability of their transactions. The World Bank, one of the Bretton Woods twins, concluded the world’s first swap deal in 1981, with IBM as the counterparty and Salomon Brothers as the arranger. Where Salomon Brothers led, others followed, piling innovation on innovation.
An ever-increasing number of novel products designed to manage and control financial risks more effectively were gradually offered to customers. There is today an impressive array of financial risk management products available.