Globalization of Financial Markets

Globalization of Financial Markets

Introduction

Financial globalization (or financial globalization) means the creation of a regional market integration of external financing. The financial aspect of globalization has three dimensions: geographical (mobility of capital from one country to another), functional (the capital market was compartmentalized: money market, stock market, etc) and temporal.

The financial flows are the sector most upset by the interoperability and global information technology hence their role in the phenomena of globalization in general.

Discussion

The globalization of financial markets has reached a considerable degree in recent years and beyond in many ways the dynamics of globalization of goods markets. This trend is expected to significantly intensify in the future. The globalization of financial markets has, in principle, positive effects: it results in increased efficiency in the allocation of capital globally and allows a better distribution of investment risk. But at the same time, globalization of financial markets leads, Switzerland, to more takeovers by foreign investors and generates new risks difficult to quantify for investment abroad. Due to the globalization of financial markets, monetary policy faces a double challenge: firstly, the mode of the transmission mechanism of monetary policy is changed, and interpretation of economic models becomes more difficult and secondly, the impact of shocks from abroad in the financial markets and the economy is growing in Switzerland. As the globalization of financial markets does it lead to increased uncertainty in terms of monetary policy and increases the necessity of stabilizing the latter by the national central banks. Overall, as a small open economy with a highly developed financial sector, Switzerland can enjoy more than the average of the globalization of financial markets. It should seize this opportunity and avoid protectionism during takeovers by foreign investors and that excessive regulation in the context of investments made abroad. Moreover, it is ...