When you place your chips on a specific color (i.e. red or black) in a roulette game at a casino, you are gambling. The bigger the stake, the bigger is the gamble. You can gamble all of the money that you have in one bet. If you win, you win big. If you lose, you lose all.
Gambling is considered to be bad, especially if the bet is big and a loss may lead to financial ruin.
In recent years, banks have been gambling big, very big, to the tune of billions of dollars. They can bet on currency rates or on the chance of failures of any corporation. The types of bets have proliferated under the name of financial engineering and innovation. In some cases, they can gamble large amounts representing the capital of their shareholders and the deposits of their customers as well.
When the banks make these gambles, they do not call it a gamble. They call it by more respectable names, such as "trading:" or "risk management".
Gambling is bad, if the stakes are high and may cause financial ruin. It is bad for individuals. It is bad for businesses. It is bad for banks.
Tan Kin Lian
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