Chapter 1 International Financial Markets: Basic Concepts

Chapter 1 International Financial Markets: Basic ConceptsIn daily life, we find ourselves in constant contact with internationally traded goods. If youenjoy music, you may play a manufactured CD of music by a Polish composer througha Japanese amplifier and British speakers. You may be wearing clothing made in China oreating fruit from Chile. As you drive to work, you will see cars manufactured in half a dozendifferent countries on the visible in daily life is the International trade in Financial assets, but its dollar volumeis much greater. This trade takes place in the International Financial markets. When inter-national trade in Financial assets is easy and reliable due to low transactions costs in liquidmarkets we say International Financial markets are characterized byhigh capital capital was highly mobile in the nineteenth century.

Interpreting the 2007 triennial survey , BIS Quarterly Review, December 2007. Foreign exchange turnover Daily averages in April 0.0 0.8 1.6 2.4 3.2 1992 1995 1998 2001 2004 2007 14 18 22 26 30 Current US dollars, in trillions (rhs) Ratio to trade flows (lhs)¹ Ratio to trade and capital flows (lhs)¹

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  1998, International, Interpreting

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