Some people believe that we must have a truly global capital or financial market

Question

Some people believe that we must have a truly global capital or financial market in order to maximize business ventures and profit. Identify and describe at least two factors you think are holding back the creation of a truly global capital market. How might a truly global capital market function differently from the current international business market? (Consider interest rates, currencies, regulations and financial crises experienced in some countries.) Having to use different currencies in international business prevents maximum growth and activity. What are the pros and cons (for both businesses and governments) of replacing national currencies with a regional or even a global currency? If we do go to a global or international monetary system, would such an international system use a floating or fixed exchange rate? Explain your answer. Would it be possible to base an international currency on gold? Why or why not? . In your opinion, is there a need for regulation among international financial centers to control money laundering and other illegal activities?

Explanation / Answer

ANSWER-

* TWO FACTORS THAT ARE HOLDING BACK THE CREATION OF TRULY GLOBAL CAPITAL MARKET-

ACCORDING TO ME, first point is-

currency exchange rate- because every country has its own currency & exchange rate for that. some country have higher currency exchange rate than others. if truly global market is introduced then there will equal exchange rate for all currency which will equalise the level of the value of the currency of all country. & countries like US, UK,AUSTRALIA etc which have high currency value will not agree as their economy can fall back.

Unequal returns- if the whole world convrted into a global market then returns on investment will be unequal beacuse identical assets of any country will share the same price which will generate the unequal returns to different different countries.

*FUNCTION OF TRUE GLOBAL MARKET & CURRENT INTERNATIONAL BUSINESS MARKET-

*INTEREST RATES- people with extra funds invest in the business outside the country & earns high interest rates on the investment but if the true global market is intoduced then the interest rates would be fixed or same in all countries.

* CURRENCIES-  currency is a instrument which is used to do business in any counrty & in current internation business currency does not have same value, each country has its own value in compare of other country like the price value of US dollar is higher than the Indian rupee. & this value is also change according to the economy of the country.but if truly global market is introduced then the rate of currency of every country would be same. which would be good for poor countries but bad for the developed countries.

* REGULATIONS & FINANCIAL CRISIS- In current global market, countries with abundant of resources help the poor countries in thier time of crisis by providing funds, natural resources, technical support etc. to support global business market. but if the true global market is introduced then all countries would be equal in terms of finance then would help financialy the country facing crisis if there is no gap of poor or rich country.

like india is facing the high prices in petrol & diesals from kuwait, iran.

* PROS & CONS OF REPLACING NATIONAL CURRENCY WITH REGIONAL OR GLOBAL CURRENCY-

-PROS FOR BUSINESS & GOVERNMENT-

- CONS FOR BUSINESS & GOVERNMENT-

yeah theoritaclly, true global is good for growth but in practical it may be bad for some countries.

* DECISION REGARDING USING FLOATING OR FIXED EXCHANGE RATE-

IN my opinion, if we go to global monetary sytem in a truly global market then the exchange rate would be fixed beacuse the currency will be global of every country then there will be less demand & supply of currency between the countries as the value is same for all currency.

so, i have given four answers which is in my rights as expert.hope these answers will help you.

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