What do you get if you take a room of 150 foreign exchange professionals and quiz them on their favourite subject? The answer is a surprising number of wrong answers. At Euromoney's annual FX awards dinner in London last month, banks pitted their wits against each other in teams of 10, under the auspices of quizmaster Magnus Magnusson. Only one came anywhere close to getting full marks, so close, in fact that rivals insisted they must be the luckiest of guessers. As for the rest, not a single team knew the date of the UK's black Wednesday - September 16 1992. One of the leading American FX banks thought the currency of Ethiopia was the pound (it's the birr), and drew a blank on Kazakhstan (tenge). As if that wasn't bad enough, the closing rate of euro against the dollar on the previous day also momentarily escaped them. They did manage to recall who finished top of Euromoney's first foreign exchange poll in 1969 however.

The highly volatile debt capital markets of the past 12 months have provided an extraordinary set of challenges to borrowers, whether they be highly experienced and well-rated issuers or less creditworthy newcomers.

In early May, Katsuyuki Sugita, president of Dai-Ichi Kangyo Bank (DKB) and co-CEO of the newly created Mizuho Bank, returned to duty from sick leave. He made all the right noises to staff that he was fighting fit - "full of power and energy" - and ready to play a full part in the next stage of the merger of DKB, Fuji Bank and Industrial Bank of Japan (IBJ).

There has been a spate of investment-grade companies getting downgraded to junk, or even default status over the past 18 months, but to see the triple-A-rated securitized bonds of what was an investment-grade company at the start of 2000 hit the ropes is something new and more shocking.

After a four-month absence from the market, Yann Gindre - ex UBS, BZW, Commerzbank and Chase - has finally resurfaced. But he's not going back to banking. Gindre was always one of the more colourful bond origination professionals, but he has decided to hang up his Euromarket hat and become, of all things, a headhunter.

Washington was in a tizzy last month after the sudden defection from the Republican party of senator James Jeffords of Vermont. Jeffords' historic move tipped control of an evenly divided US Senate to the Democrats and it came within a whisker of changing the fate of the Bush administration's tax proposals. But Jeffords decided to stay in the Republican fold for a few more days until Congress could finish work on that all-important bill. Big bucks had been riding on the outcome for Wall Street.

April's budget proposals from UK finance minister Gordon Brown contained a few little noticed but significant measures that might benefit UK companies, notably the proposal to make purchases of intangible assets, including goodwill, tax deductible bringing the UK into line with the US.

The pace of yen borrowing in international markets and in the Japanese domestic market by non-Japanese issuers has slowed just slightly in 2001, following last year’s boom. Downgrades of some large corporate issues have meant losses for Japanese buyers. But foreign names are still issuing yen bonds in healthy volumes and will continue to do so for as long as Japanese investors are deprived of attractive domestic alternatives.

The woman wags a hectoring finger at the minister. "If a child is unwell," she says, "its mother does not give it an injection of poison." She and a group of trade union colleagues are accusing the minister of doing just that by privatizing the aluminium plant in Chattisgarh state. For 40 minutes they sit in his office and plead with Arun Shourie, minister in charge of privatization, administrative reform and a panjandrum range of critical issues concerning modernization of India's economy, to roll back the privatization of Bharat Aluminium (Balco).

For a nation of such a small population - just under 280,000 - Icelanders have managed to achieve a remarkable amount of firsts. The world's first national parliament, the Althingi, was established in 930 AD after a group of pagans from Norway had travelled to Iceland in search of freedom from the oppressive but impressively named King Harald Fairhair. The world's first elected female head of state, Vigdís Finnbógadottir gained office in Iceland in 1980. The country was also the birthplace of the first European to set foot on the continent of North America, the intrepid Leifur Eiríksson achieving this feat in the year 1000 AD, beating Christopher Columbus to the accolade by almost 500 years.

Credit derivatives are at the heart of credit markets, yet a mystique prevails among those on the outside of the financial industry over exactly how they operate. Stephen Stonberg of Deutsche Bank examines the future of the credit derivatives market.

Issuer: People’s Republic of China Amount: $1 billion and e550 million Types of deal: Eurobonds Date: May 17 2001 Bookrunners: Goldman Sachs, JP Morgan, Morgan Stanley (for dollars) and Barclays Capital, BNP Paribas, Deutsche Bank (euros)

Ecuador's finance minister, Jorge Gallardo, is a popular man on Wall Street. He's very bright, with a quick wit and a solid grasp of economic fundamentals and economists' concerns. But when he visited New York in May, his demeanour was visibly subdued.

European banks risk finding themselves outpaced by US competitors in the bid to protect and exploit their intellectual property.

Iceland’s economy has boomed since joining the European Economic Area in 1993 brought market-based reforms. The economy has diversified, but now the government wants to rein growth in. That’s hit the stock market.

Monetary union’s effect on European investment patterns is giving rise to a host of new benchmarks. In both equities and bonds, index providers are scrambling for continental superiority. New providers can win market share quickly but the established names are fighting back.

The best guess as to the eventual size of Chinese banks’ bad debts is that they will be many times larger than initial official estimates. In a desperate effort to clean up their balance sheets, banks have shifted bad debts to asset management companies. But there’s no sign that these can offload them to new money investors or engineer decent recovery rates. And there’s plenty more to come. Ministers may feel a little queasy when they get the final bill.

After a hectic period of consolidation, Portuguese banks have fed heartily off rapid economic growth, building substantial loan books, particularly in the retail sector. The boom is continuing but credit quality worries are beginning to emerge and a slowdown in growth could seriously hurt banks’ profits.

When Julian Simmonds, global head of foreign exchange and structured products businesses at Citigroup, announced his decision to retire this May, it sent shockwaves through the bank. Senior executives are thought to be trying to talk Simmonds, who joined Citibank in 1972 and achieved prominence by building its forex business into the undisputed market leader in the 1980s and 1990s, into hanging round a little longer. "No one event has prompted my decision," Simmonds tells Euromoney. "But 29 years is a long, long time in a high pressure position. I have outside interests, as has my wife and I'd like to participate in those with her."

Global head of corporate finance and recovery, PriceWaterhouse Coopers

In the back parlours of the financial markets, where credit derivatives meet securitization, bankers are slicing and dicing credit to create a grand smorgasbord of investment products. The names of these delicacies are confusing, the recipes are closely guarded secrets and each firm has its own unique house style. But for firms and bankers with the requisite know-how, there is plenty of money to be made. The top credit structurers – bankers with a background in quant, an understanding of credit and a flair for complex legal contracts – can name their price.

Which economic bloc is going to perform best this year, Europe or North America? The consensus is that the US is heading for very low growth, say under 2%, while Europe will do better, with 2.5% at least.

Privatization has been the fate of all but a few of Europe's unquoted financial institutions. Demutualization is all the rage. Non-shareholder banking models are few and far between, but Spain is a notable exception. Here, the private savings banks are growing and consolidating and show no signs of letting go of their special legal status. The Spanish savings bank model has virtually no critics. It has proved itself a successful structure because of a number of features. Most notably, since the creation of these unique financial institutions over a century ago, there has not been a single default.

When its audacious bid to hire 40 debt markets bankers from CSFB failed, Barclays Capital quickly turned its attention to Deutsche Bank. In an effort to build up its US and global debt businesses, it has been quietly hiring for months. Now the big name new recruits from Deutsche must ensure this investment bears fruit.

That Goldman Sachs feels it must write to the Federal Accounting Standards Board (FASB) to ask that it consider making banks mark loans to market is telling. It's the clearest signal yet that the pure investment banks are, finally, concerned at the potential which lurks within the large commercial and universal banks.

In the May Issue of Euromoney the result of the vote for hotels in Tokyo were omitted from the Business Travel Poll.

Is all that talk of looming recession and job losses getting you down? Sick of being told to look for bargains? Was last month's recommendation of Smith and Wollensky's Nasdaq special lunch just too depressing? Then perhaps the millionaire's margarita is for you. Yes, in a determined effort to appeal to the would-be obnoxiously wealthy in us all, Grand Marnier is trying to promote the millionaire's margarita as the drink to have to celebrate a deal or just simply spend your severance package.

With the domestic economy still in a weak state, Japanese corporates are reluctant to go to the relatively expensive international bond markets for funding. Domestic borrowing is cheaper, particularly as banks are being encouraged by the government to lend on easy terms despite the hangover of bad debt. Only the highest rated Japanese borrowers are raising funds in international markets.

Europe’s newly emerging mass affluent are the latest target – and the latest obsession – for financial services operators. However many players have yet to unveil either a clear strategy or the right products. Indeed some big names have already decided to cut their considerable losses and leave the market behind, convinced they won’t be able to make it pay. But whoever comes up with the winning formula is likely to enjoy a bonanza.

Offered a rare chance to jump into the first rank of transition economies, the jewel of the Adriatic must choose between getting ahead and just getting by.