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Shaping the international financial system in century of globalization

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  • Viktor O. Ledenyov
  • Dimitri O. Ledenyov

Abstract

We educe a perspective on how best to regulate the bank of tomorrow in frames of debate launched by the International Centre for Financial Regulation and Financial Times. Our goal is to create a conceptual framework for policymakers and regulators to shape the international financial system in century of globalization using the 1888 FT's motto: "Without fear and without favour." Our prospect employs an analytical approach, which focuses on the origins and evolution of banking system, its transformation over the recent decades, subsequent encountering the limits to growth and redefinition of new strategic boundaries of emerging financial industry. We identify the main reasons and limitations, which led to the global financial crisis. We propose the new research agendas with the aim to understand the situation in finances, evaluate the created systemic damages, and find the possible ways to resolve the existing problems through introduction of new banking regulation. We think that the global economic and financial systems are highly nonlinear systems. In our opinion, the frequency, phase and amplitude modulation during the mixing of waves, which characterize the Kitchin, Juglar, Kuznets, Kondratiev economic cycles, may result in origination of strong nonlinear dynamics in financial system, accompanied by chaos- induced phenomena. These nonlinear effects have to be taken to the account, when adding the liquidity to the financial system in small quantas in series over time period during the Quantitative Easing policy execution by central banks. We propose the Random Tax to be selectively imposed on the profits, obtained by market agents during high-risk high-profit speculative transactions. We expect that the Random Tax will stabilize the financial system in conditions of free market capitalism.

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  • Viktor O. Ledenyov & Dimitri O. Ledenyov, 2012. "Shaping the international financial system in century of globalization," Papers 1206.2022, arXiv.org.
    • Handle: RePEc:arx:papers:1206.2022
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    Cited by:

    1. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2013. "Some thoughts on accurate characterization of stock market indexes trends in conditions of nonlinear capital flows during electronic trading at stock exchanges in global capital markets," MPRA Paper 49921, University Library of Munich, Germany.
    2. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2013. "On the accurate characterization of business cycles in nonlinear dynamic financial and economic systems," Papers 1304.4807, arXiv.org.
    3. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2013. "On the theory of firm in nonlinear dynamic financial and economic systems," Papers 1302.6721, arXiv.org, revised Mar 2013.
    4. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2013. "On the Stratonovich – Kalman - Bucy filtering algorithm application for accurate characterization of financial time series with use of state-space model by central banks," MPRA Paper 50235, University Library of Munich, Germany.
    5. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2013. "To the problem of evaluation of market risk of global equity index portfolio in global capital markets," MPRA Paper 47708, University Library of Munich, Germany, revised 20 Jun 2013.
    6. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2012. "On the Risk Management with Application of Econophysics Analysis in Central Banks and Financial Institutions," Papers 1211.4108, arXiv.org.
    7. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2013. "On the optimal allocation of assets in investment portfolio with application of modern portfolio and nonlinear dynamic chaos theories in investment, commercial and central banks," Papers 1301.4881, arXiv.org, revised Feb 2013.
    8. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2015. "Wave function method to forecast foreign currencies exchange rates at ultra high frequency electronic trading in foreign currencies exchange markets," MPRA Paper 67470, University Library of Munich, Germany.
    9. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2013. "To the problem of turbulence in quantitative easing transmission channels and transactions network channels at quantitative easing policy implementation by central banks," Papers 1305.5656, arXiv.org, revised May 2013.
    10. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2012. "On the new central bank strategy toward monetary and financial instabilities management in finances: Econophysical analysis of nonlinear dynamical financial systems," Papers 1211.1897, arXiv.org.

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