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Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. Even the most cursory review of major international economic trends over the past several decades shows there have been revolutionary changes in world financial markets.
During the s and s, financial institutions and their regulatory structures in major industrial countries evolved in relative isolation from external developments. During those years, most countries, including the United States, imposed restrictions on international capital movements.
Major international institutional agreements after World War II, such as the Bretton Woods agreement and the General Agreement on Tariffs and Trade, liberalized world trade but did little to free the movement of international capital. After the financial disruptions of the s, many had questioned whether free capital flows and liberalized capital markets were even desirable. In the International Monetary Fund, the basic obligation of member nations—their code of good behavior—was framed exclusively in terms of avoiding restrictions on current account payments: that is, payments for merchandise trade, international services, investment incomes and payments, remittances, and official government transfers.
Meanwhile, the rules and the philosophy with respect to capital transactions were far different: many countries restricted outward capital transfers either because they preferred their capital to be invested within their domestic economies or because they wished to prevent downward pressure on their exchange rates.
That situation and those views changed dramatically in the s, and the pace of change accelerated in the s. At the same time, the structure and operation of world financial markets have been transformed. Today, world financial markets are highly integrated, and transactions have become increasingly complex. These phenomena are reflected in cross-listing of securities in several countries, cross-country hedging and portfolio diversification, and hour trading in financial instruments at exchanges around the world.
Many of the channels used for financial transactions have also changed. There has been a major shift, relatively, from banks to nonbank financial intermediaries, such as brokerage houses, securities firms, insurance companies, and pension funds. There has also been a shift from loans to securities and a rise in the use of foreign financial centers.
In addition, there has been a surge in the use of new financial instruments and, in particular, of derivative products such as financial options, futures, and swaps on interest rates, foreign currencies, stocks, bonds, and commodities.
These instruments have been developed to meet the needs and preferences of different customers, including their desire to hedge risks in an environment of fluctuating exchange rates, interest rates, stock prices, and commodity prices.
The unprecedented changes in world financial markets have had significant implications for public policy and data collection. Because of international capital movements, policies and developments in other countries increasingly influence domestic economic performance.
As a consequence, there is a need for information about the new and emerging global financial environment. Yet changes that have taken place in world financial markets themselves compound the difficulty of acquiring the information. Given the difficulties involved and the budgetary constraints faced by statistical agencies in the public sector, several questions arise: What is the current need for data on international capital transactions?
In what ways are current U. Are there conceptual flaws or data defi-. A number of significant international financial developments have occurred over the past half century, including the emergence of the Euromarkets in the early s, which circumvented domestic financial regulations. This report focuses on changes in world capital markets associated with financial deregulations in major industrial countries since the late s.
Are there alternative ways to gather the data that would be more accurate, more useful, more timely, more technologically advanced, or less burdensome and costly? Department of Commerce, the Panel on International Capital Transactions was convened to examine the changes in the global financial environment, assess public and private needs for data on international capital transactions, review the adequacy of existing data, and consider alternative collection methods. Subsequent research grants from the Federal Reserve Board and the U.
Department of State also supported the study. The panel's goal has been to develop recommendations for the collection of data on U. This study is a follow-on to the one completed by a previous panel of the Committee on National Statistics. That report, Behind the Numbers: U. Trade in the World Economy Kester, , reviewed the adequacy of data on U. It recommended steps to correct the problems of underreporting of U. It also proposed measures to improve monitoring of sales and purchases by U.
It pointed out that, of all U. That report concluded that improving the data on U. Although the changing global trade and financial environment has led several international organizations to undertake initiatives to improve the concepts and methods of compiling international economic statistics, none of the resulting studies focuses specifically on data on U.
Nevertheless, improving the quality of U. Better U. Other countries would also benefit if improved U. Refining U. This improvement in comparability, of course, would apply to the data of other countries as well. Data comparability is important not only for international economic policy coordination, but also for data exchanges between the United States and other countries. The panel believes this report will contribute to a better understanding of the global financial flows that have come to characterize the rapidly evolving global economy.
In conducting this study, the panel extensively reviewed existing literature, including recent studies by the International Monetary Fund , b , the Federal Reserve Board Stekler, ; Stekler and Truman, , and the Bank for International Settlements , a, b. It examined the concepts, methods, and procedures that U. It drew on the insights and expertise of many individuals in federal agencies, international organizations, foreign government agencies, businesses, trade associations, and research organizations, including those from the U.
Department of Commerce, the U. Department of the Treasury, and the U. It con-suited experts in the accounting profession and other expert groups currently examining the changes in global financial markets and the treatment of complex financial transactions. The panel heard expert testimony and reviewed written comments from numerous government, academic, and industry users on the adequacy of the existing data.
The panel also canvassed data filers from commercial and investment banks, securities firms, brokerage houses, and multinational corporations to learn their views on data reporting requirements.
In developing its recommendations, the panel took into account the current budgetary constraints that face statistical agencies, as well as the rapidly evolving world financial environment and the advent of innovative information and telecommunications technologies. Recommendations in this report are ranked in terms of. The rest of this chapter reviews the forces that have dramatically transformed world financial markets over the last decade or so and their implications for U.
Chapter 2 describes the existing system for compiling data on U. Chapter 3 examines the adequacy of the existing system, taking into account the views of data collection agencies, data filers, and data users, and makes recommendations for improvements. Chapter 4 reviews the surge of transactions in financial derivatives and discusses their implications for the coverage and the interpretation of existing data on U.
Chapter 5 explores the feasibility of using alternative data sources and collection methods to improve the coverage and accuracy of existing data, including automation, the use of global custodians, exchanges, settlement and clearing houses, and databases of international organizations. Appendix A highlights key features of the data collection systems of the United Kingdom, Germany, and Japan and discusses actions being taken by these countries to improve information on their international capital transactions.
Appendix B summarizes the results of the panel's canvass of data compilers, filers, and users on the adequacy of the existing data system. Throughout this report, following the balance-of-payments framework for current U. Other terms commonly used in the field, and in this report, are "offshore," "abroad," and "overseas," all of which are the same as foreign for purposes of international capital transactions, which are also sometimes called cross-border transactions.
The rapid expansion and integration of world financial markets since the late s can be attributed to several factors. They include a worldwide move toward deregulation of financial institutions and transactions; macroeconomic imbalances among countries, which have induced capital flows; improved knowledge about market and economic conditions around the world; and breakthroughs in information and communications technology that have increased exponentially the capacity for handling large volumes.
In addition, competition has grown among financial institutions of various types and in various countries, whose portfolio management strategies in volatile markets have resulted in new products and new modes of operation.
The development of world financial markets in response to these forces and the U. The trend toward financial deregulation accelerated in the early s, when the government controls on financial activities that had been established in the s and s and earlier were proving ineffective and causing serious inefficiencies in the allocation of capital and the operation of monetary policy.
The United States removed its last capital controls in ; Germany significantly reduced its restrictions on capital movements in the s; and the United Kingdom dismantled its exchange controls in , Japan in the early s, and France and Italy in the late s. Countries embraced deregulation because it was thought that free flows of capital would open up both saving and investment opportunities for firms and individuals and better match the changing needs of suppliers and users of funds, thereby facilitating the efficient allocation of capital and promoting growth in income and output.
In the United States, the liberalization of domestic financial markets since the late s has further facilitated international capital flows. The phaseout of interest rate ceilings Regulation Q , 2 the easing of portfolio restrictions on pension funds and insurance companies, and the removal of a variety of restrictions on the permissible activities of banks 3 have facilitated large transfers of money, both within national borders and across them. The lowering of institutional barriers was intended to allow firms and individuals to adjust their claims and liabilities with greater ease in order to improve the liquidity of their portfolios and diversify.
Regulation Q set the maximum level of interest rates that banks and savings and loan companies could pay on deposits. Banks are still limited in the extent to which they can diversify into insurance, investment, and underwriting services.
As of mid, banks, unlike enterprises in other industries, were prohibited from branching freely across state lines. However, under recently enacted legislation, this prohibition will be removed over the next few years. The drive toward international diversification by U. The process of integration has also intensified as foreign investors and financial institutions have been allowed relatively freely to enter domestic markets in different parts of the world. Between and , for example, the number of foreign banks in the United States rose from about to In foreign banks accounted for 18 percent of total banking assets in this country and operated offices Federal Reserve Board of Governors, There are other measures of increased integration of financial markets: over the same period, the value of U.
Bureau of Economic Analysis, a; a. In an environment of deregulated and liberalized financial markets, international capital movements have been driven mainly by economic fundamentals.
The macroeconomic conditions of various countries and their trade and tax policies, for example, affect the expected rates of return on various investments in different markets. In the mid- to late s, large capital flows resulted from the recycling of the oil export surpluses of the Organization of Petroleum Exporting Countries, many of them through international banks to sovereign borrowers in the developing countries.
During the late s and early s, there was considerable capital flight from many developing countries as uncompetitive interest rates and exchange rates, large fiscal deficits, and high. Foreign banks with U. Additional regulatory authority was provided by the Foreign Bank Supervision Enhancement Act in Beginning in the early s, large capital inflows into the United States were an important source of financing for the sizable federal budget deficits being incurred.
Differences in the mix of fiscal and monetary policies between the United States and other industrial countries over the past decade have directly affected exchange rates for the dollar. The large movements of the dollar against other major currencies since the s, in turn, have contributed to increases in sales and purchases of dollar-denominated securities and the expansion of foreign-currency trading.
In , differentials approaching 6 percentage points or more in interest rates between the United States and Germany attracted capital to Germany from the United States and other countries. Following unification, Germany relied on high interest rates to dampen inflationary pressures arising from the huge costs of revitalizing the economy of the former East Germany. Also in the early s, rapid economic growth in East Asian countries and large export surpluses in those countries have generated pools of savings that flow into the global economy to finance the investments that offer the highest rates of return.
Technology is another force that has changed the operation and structure of international financial markets.
Through timely, in-depth analysis of companies, industries, markets, and world economies, Morgan Stanley has earned its reputation as a leader in the field of investment research. COVID has ushered in a new reliance on tech, connectivity and e-commerce. How will the accelerated pace of adoption change digital industry priorities post-pandemic? Read the latest insights from this year's TMT U. Foreign-policy shifts, global trade, the fate of stimulus and the path of the coronavirus are just a few of the variables that investors should consider as President-elect Joe Biden prepares to take office.
Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. Even the most cursory review of major international economic trends over the past several decades shows there have been revolutionary changes in world financial markets. During the s and s, financial institutions and their regulatory structures in major industrial countries evolved in relative isolation from external developments. During those years, most countries, including the United States, imposed restrictions on international capital movements.
David Kelly, Chief Global Strategist, previews this quarter's themes and invites you to watch the entire seminar. Need more Guide to the Markets? Access an additional collection of Guide to the Markets slides, updated on a quarterly basis. Drawing on the depth and breadth of their market and economic expertise, our global macro strategists offer insight into today's big investment themes to enable more confident portfolio decisions. Get insights on macro topics such as manager dispersion, while also diving into real estate, private credit, private equity and hedge funds and more. A new way for financial advisors to access and customize J.
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A capital market is a financial market in which long-term debt over a year or equity -backed securities are bought and sold. Securities and Exchange Commission SEC oversee capital markets to protect investors against fraud, among other duties. Modern capital markets are almost invariably hosted on computer-based electronic trading platforms ; most can be accessed only by entities within the financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. As an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market, though sales to individuals form only a tiny fraction of the total volume of bonds sold. Various private companies provide browser-based platforms that allow individuals to buy shares and sometimes even bonds in the secondary markets.
Беккер поднял .
Сьюзан опасливо огляделась. Если до этого Хейл не знал, что они идут, то теперь отлично это понял. Стратмор нажал несколько кнопок и, прочитав полученное сообщение, тихо застонал. Из Испании опять пришли плохие новости - не от Дэвида Беккера, а от других, которых он послал в Севилью. В трех тысячах миль от Вашингтона мини-автобус мобильного наблюдения мчался по пустым улицам Севильи.
Да и весь мир криптографии изменился. Новые обязанности Сьюзан были засекречены, в том числе и для многих людей в высших эшелонах власти. - Шифры, - задумчиво сказал Беккер - Откуда ты знаешь, с чего начинать.
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