The global financial system is vast and global flows within this system have an enormous effect on the real economies of different countries; that is, on GDP, economic growth, and the well-being of individuals.

1. 10 Key Facts
AboutInternational Financial Markets
1
10 Key FactsABOUT
International Financial Markets

2. 10 Key Facts
AboutInternational Financial Markets
1
The global financial system
is vast and varied; it consists
of many different types
of financial institutions, as
well as financial markets
in stocks, bonds,
commodities, and
derivatives.

3. 10 Key Facts
AboutInternational Financial Markets
2
The global financial system promotes
economic growth by:
• Creating money and money-like claims
• Facilitating specialization and promoting trade
• Facilitating risk management
• Mobilizing resources globally
• Obtaining information
• Increasing the set of available opportunities

4. 10 Key Facts
AboutInternational Financial Markets
3
The global financial system is
highly interconnected.
This interconnectedness
increases its complexity and
the need for international
harmonization of regulation.

5. 10 Key Facts
AboutInternational Financial Markets
4
Firms use the global financial
markets to raise capital.
The depth and liquidity of
the global financial markets
help companies reduce their
capital costs, improve access to
financing, invest more, and grow.

6. 10 Key Facts
AboutInternational Financial Markets
5
Financial architecture
refers to the composition of a
country’s financial system, in
particular whether it is
bank-dominated or
market-dominated.

7. 10 Key Facts
AboutInternational Financial Markets
6
The global financial system
promotes global
trade through financing
mechanisms outside the banking
system, such as trade credit.

8. 10 Key Facts
AboutInternational Financial Markets
7
Large projects, including those for
infrastructure, are often financed
through private-public
partnerships involving
project financing.

9. 10 Key Facts
AboutInternational Financial Markets
8
Banks as well as financial markets are regulated, and in both cases
regulators face tensions in enforcing regulations that
pull in opposite directions.

10. 10 Key Facts
AboutInternational Financial Markets
9
Bank regulation has multiple
goals, and it is being increasingly
harmonized, but the danger is
that regulation may go
too far.

11. 10 Key Facts
AboutInternational Financial Markets
10
Market-based
financing, commonly know
as shadow banking—financial
intermediaries other than
commercial banks (e.g., mutual
funds, investment banks, and
hedge funds)—is growing more
rapidly than traditional banking.

12. Conclusion:
The global financial system is vast and global flows within
this system have an enormous effect on the real economies
of different countries; that is, on GDP, economic growth, and
the well-being of individuals.
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