Financial Market Globalization: Present and Future
It is widely recognized that financial market globalization has been developing. International financial markets have expanded substantially, and transaction volumes in foreign exchange markets and capital markets have increased markedly. Progress in information and telecommunications technologies, liberalization in capital markets, and development of new financial instruments have further stimulated international capital flows, leading to more expansion and efficiency in international financial markets. However, empirical evidence suggests that national borders have been serving as some sort of barriers to international capital flows. Portfolios of investors based in industrialized countries are biased toward domestic assets (the "home bias puzzle"), and national savings tend to be absorbed domestically (the "Feldstein-Horioka paradox"). From a long-term historical perspective, the size of net capital flows has not increased so much. Alternatively, such development of globalization can be viewed differently once we take account of other aspects such as off-balance sheet transactions. Derivative instruments offer the possibility of unbundling risks inherent in underlying assets, and such unbundled risks can be repackaged and dealt in separately. Thus, cross-border derivatives transactions enhance the effectiveness of risk transfer. Given the recent growing trend toward financial globalization, how and at what pace financial globalization will develop in the future have important implications for the conduct of monetary policy by central banks. If financial markets become further integrated and international capital flows more actively, it is obvious that independent monetary policy directed toward domestic goals, liberalization of capital mobility, and fixed foreign exchange rates cannot be achieved simultaneously. In addition, prudential policy might face new problems pertaining to the stability of the financial system due to increasing international linkage
Volume (Year): 17 (1999)
Issue (Month): 3 (December)
|Contact details of provider:|| Postal: 2-1-1 Nihonbashi, Hongoku-cho, Chuo-ku, Tokyo 103|
Web page: http://www.imes.boj.or.jp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- C.P. Kindleberger, 1995. "Asset inflation and monetary policy," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 48(192), pages 17-37.
- Baxter, Marianne & Jermann, Urban J. & King, Robert G., 1998.
"Nontraded goods, nontraded factors, and international non-diversification,"
Journal of International Economics,
Elsevier, vol. 44(2), pages 211-229, April.
- Marianne Baxter & Urban J. Jermann & Robert G. King, 1995. "Nontraded Goods, Nontraded Factors, and International Non-Diversification," NBER Working Papers 5175, National Bureau of Economic Research, Inc.
- Feldstein, Martin S, 1988. "Distinguished Lecture on Economics in Government: Thinking about International Economic Coordination," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 3-13, Spring.
- Wincoop, Eric van, 1994. "Welfare gains from international risksharing," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 175-200, October.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Maurice Obstfeld., 1994.
"International Capital Mobility in the 1990s,"
Center for International and Development Economics Research (CIDER) Working Papers
C94-037, University of California at Berkeley.
- Maurice Obstfeld, 1994. "International capital mobility in the 1990s," International Finance Discussion Papers 472, Board of Governors of the Federal Reserve System (U.S.).
- Maurice Obstfeld, 1993. "International Capital Mobility in the 1990s," NBER Working Papers 4534, National Bureau of Economic Research, Inc.
- Obstfeld, Maurice, 1994. "International Capital Mobility in the 1990s," CEPR Discussion Papers 902, C.E.P.R. Discussion Papers.
- Obstfeld, Maurice, 1994. "International Capital Mobility in the 1990s," Center for International and Development Economics Research (CIDER) Working Papers 233380, University of California-Berkeley, Department of Economics.
- Frankel, Jeffrey A & Rose, Andrew K, 1998.
"The Endogeneity of the Optimum Currency Area Criteria,"
Royal Economic Society, vol. 108(449), pages 1009-1025, July.
- Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
- Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
- French, Kenneth R & Poterba, James M, 1991.
"Investor Diversification and International Equity Markets,"
American Economic Review,
American Economic Association, vol. 81(2), pages 222-226, May.
- Kenneth R. French & James M. Poterba, 1991. "Investor Diversification and International Equity Markets," NBER Working Papers 3609, National Bureau of Economic Research, Inc.
- Stockman, Alan C. & Dellas, Harris, 1989. "International portfolio nondiversification and exchange rate variability," Journal of International Economics, Elsevier, vol. 26(3-4), pages 271-289, May.
- C.P. Kindleberger, 1995. "Asset inflation and monetary policy," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 48(192), pages 17-37.
- Tesar, Linda L., 1995. "Evaluating the gains from international risksharing," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42(1), pages 95-143, June.
- Fukao, Mitsuhiro & Okina, Kunio, 1989. "Internationalization of financial markets and balance of payments imbalances: A Japanese perspective," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 30(1), pages 167-220, January.
- Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239, December.
- Bottazzi, Laura & Pesenti, Paolo & van Wincoop, Eric, 1996. "Wages, profits and the international portfolio puzzle," European Economic Review, Elsevier, vol. 40(2), pages 219-254, February.
- Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
- Karen K. Lewis, 1996. "Consumption, Stock Returns, and the Gains from International Risk-Sharing," NBER Working Papers 5410, National Bureau of Economic Research, Inc.
- Lewis, Karen K., 1995. "Puzzles in international financial markets," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 37, pages 1913-1971 Elsevier.
When requesting a correction, please mention this item's handle: RePEc:ime:imemes:v:17:y:1999:i:3:p:1-40. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kinken)
If references are entirely missing, you can add them using this form.