The latest organization with a rogue trader problem is Greenpeace, and that tells us a lot about the challenges of being a global organization.
While most people associate the environmental group with rafts full of activists occupying offshore drilling platforms, all that protest work in countries all over the world also requires accountants to manage the overhead. When one of the organization’s financial managers made a big bet on currency appreciation that went south, Greenpeace lost €3.8 million ($5.2 million).
Der Spiegel has the best account: During an internal reorganization, a less-than-supervised employee bought forward options for currencies from the Thai baht to the Russian ruble in 2013 and 2014, figuring that the euro would depreciate in the meantime. But the euro has become more valuable, and the organization was left with losses, as it paid more than the market rate.
While the idea of taking such a long-term position in currency isn’t exactly standard operating procedure, multinational organizations of all stripes face different kinds of currency risk. Just look at how big business squealed when emerging market currencies began depreciating last year. The challenge is especially fraught in developing economies with less-than-stable political systems, which both global business and activist organizations such as Greenpeace are prioritizing for the same reason: The future of the world economy is emerging in places with the potential for massive growth.
But handling currency risk isn’t easy for non-financial companies—and not just because banks have a habit of rigging exchange rates. That’s one reason digital crypto-currency pioneers think bitcoin has a market niche to fill: What if, instead of dealing with different currencies and all the additional fees involved with international transfers, you could put your money in a stable, politically-independent currency until spending or converting it locally? Then you wouldn’t have to guess how government policy in fifteen different economies would affect foreign exchange rates.
As we’ve seen in practice, bitcoin’s exchange rate is a lot more volatile than its advocates intended—growing pains is the best spin on that—and the dollar remains the reserve currency of choice for people trying to avoid, rather than capitalize on, currency risk. But it is interesting to note that if Greenpeace had bought bitcoins instead of currency options with its millions last spring, they’d still be in the black, if a little shaken after the crypto-currency’s roller-coaster ride over the past year.