National Seminar: Paper Presentation
Globalised Financial System and Impact on Indian Business
Miss. Reshma Ramesh Nirbhavane
Mr. Makarand M. Dharkar
Roll no. -15
Roll No. 13
First Year MMS/MBA Student
C.K Thakur Institute Management Studies,
New Panvel - Navi Mumbai.
GLOBAL FINANCIAL SYSTEM
The global financial system (GFS) is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government departments, e.g., central banks and finance ministries, private institutions acting on the global scale, e.g., banks and hedge funds, and regional institutions HISTORY OF FINANCIAL GLOBALIZATION
The history of financial institutions must be differentiated from economic history and history of money. In Europe, it may have started with the first commodity exchange, the Bruges Bourse in 1309 and the first financiers and banks in the 15th–17th centuries in central and western Europe. The first global financiers the Fuggers (1487) in Germany; the first stock company in England (Russia Company 1553); the first foreign exchange market (The Royal Exchange 1566, England); the first stock exchange (the Amsterdam Stock Exchange 1602). Milestones in the history of financial institutions are the Gold Standard (1871–1932), the founding of International Monetary Fund (IMF), World Bank at Bretton Woods, and the abolishment of fixed exchange rates in 1973.
Massive growth have been noticed in global economy in the last couple of years, and in the field of technology, more precisely in transport and communications there was a silent revolution which made the globalization of finance an obvious choice. The International Monetary Fund (IMF) and World Bank are the two international institutions of finance which were set up to endorse world trade to keep up with the growth of Financial Globalization. During the mid-1970s, the emerging market economies did not experience much of cross-country financial flows. The rate improved during 1980s and 1990s, while in the year 1997 it reached its best. But then it had declined rapidly due to economic and financial catastrophe of the Asian and Russian countries and gradually global capital flows was completely reduced. Instead, in the early 1990s, Financial Globalization inflated noticeably and capital from developed countries to the developing countries started flowing in. From 1973 to 2005, the rate of world trade increased at a great deal. It continues to grow, and in the year 2005, the GDP of world hit 42%. ROLE OF GLOBALIZATION AND THE INTERNATIONAL FINANCIAL SYSTEM First, with respect to our domestic economies, the level of understanding about the role of finance is very limited. It is not easy to establish intuitively the positive linkages between the activities of Wall Street and the activities of Main Street. For example, we have been asked hundreds of times over the past 30 years or so to explain the connection between deposits in banks or purchases of equities and the Economist's concept of investment, in the sense of savings and investment as they are recorded in the national income accounts. Many Economists are yet to come up with a satisfactory one-sentence answer. Second, and still in the context of our domestic economies, even for those with some intuitive feel for the role of finance in a market economy, the visceral feeling among those who borrow money or take on debt is that those who lend or manage money are rapacious by nature. The local banker receives a certain degree of respect in his community, but one is hard pressed to find expressions of fondness or warmth for large financial institutions, their representatives, or their leaders, in this or any other country. Third and finally, turning...
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