Changes in the Financial World (Research Paper Sample)

THE WORLD OF FINANCE
Tang Chun Kit
ICWS ID: TANCD1503
Debbie Ball
Module Title: IC1502 Finance
3rd March, 2016
The World of Finance
Introduction
Monetary phenomenon has evolved for a long period, from barter trade, the use of cowry shells, coins and paper money; the use of debit and credit cards to many forms of electronic money. Finance is a wide concept that covers all monetary issues ranging from microeconomic to macroeconomic parameters. Financial concepts can be applied in domestic or household hemispheres, firms, industries, and in the aggregated public finance at national levels. It extends to cover monetary concepts that influence the whole world, in a multicurrency domain. Finance is elementary to trade and an integral part of any nation’s economy and the economy of the world at large. In practice, misinterpretation of – and misconduct on – financial policies, which defied the major concepts of finance was the key cause of the global financial and economic crisis. The crisis most intensely affected key world’s economic players from the United States, through Eurozone, Asia to Australia. The developing world was adversely affected as well.
Many topical issues arise in the subject of international finance or international macroeconomics. Economists question – what has happened – and what will happen to a currency, for example, the US dollar or the Europe’s euro. Is the deficit of the current account too large? Is it advantageous if a county devalues its currency at any given time? Should a country liberalize the flow of finance, should a European country such as Sweden give up their currency for euro? Should the economies of emerging markets liberalize their financial markets? Finance determines the world’s economic growth and source of stability. The International Monetary Fund should formulate effective and efficient financial equations. Some economies have questioned on globalization in a bid to speculate and understand financial trends. For one to answer the questions, it is important to understand international finance; the world of finance.
The smaller financial systems contribute to the aggregate world finance. The modern economy would never exist with the absence of efficient financial system. The financial system is defined by a collection of financial institutions, markets, regulations, and instruments through which many processes occur such as the evaluation of interest rates, trade of securities, production and delivery of financial services around the world. Economies regard financial system as a vital construct of the modern society and an integral part of an economic system, which makes it a significant component of a social system. As an integral component of the global economic system, the financial system controls the quantity and cost of funds available in all economies to carter for every day expenses. It establishes a mechanism through which funds flow between different economic entities: households and business firms; financial institutions and governments, and between the double entities respectively. The world of finance in this essence controls the economy of the world, which resonates through to all the social construct of the society.
Changes in the Financial World
In the global economic development, the role that financial innovations have played is undisputable. The innovations in the world of finance explain the solutions, new ideas, and financial instruments have been systematically implemented to change the conditions within business and financial entities in order to improve economic conditions. Even though financial changes have ensued from logical and rational perspectives of the concept of finance, the most invaluable ones have emanated from bad experiences in the financial systems. Incompetency and misconduct within the world of finance have cost the world unbearable financial damages that in turn, have resulted in adverse global economic conditions, for instance, the Great depression and the