Dating the integration of world capital markets
After the financial disruptions of the 1930s, many had questioned whether free capital flows and liberalized capital markets were even desirable.In the International Monetary Fund, the basic obligation of member nations—their code of good behavior—was framed exclusively in terms of avoiding restrictions on current account payments: that is, payments for merchandise trade, international services, investment incomes and payments, remittances, and official government transfers.As a consequence, there is a need for information about the new and emerging global financial environment. Are there conceptual flaws or data defi- A number of significant international financial developments have occurred over the past half century, including the emergence of the Euromarkets in the early 1960s, which circumvented domestic financial regulations. international transactions (in goods, services, and capital flows), transactions representing capital flows are the least adequately documented. The rest of this chapter reviews the forces that have dramatically transformed world financial markets over the last decade or so and their implications for U. Chapter 3 examines the adequacy of the existing system, taking into account the views of data collection agencies, data filers, and data users, and makes recommendations for improvements. Chapter 5 explores the feasibility of using alternative data sources and collection methods to improve the coverage and accuracy of existing data, including automation, the use of global custodians, exchanges, settlement and clearing houses, and databases of international organizations.Yet changes that have taken place in world financial markets themselves compound the difficulty of acquiring the information. This report focuses on changes in world capital markets associated with financial deregulations in major industrial countries since the late 1970s. It also proposed measures to improve monitoring of sales and purchases by U. firms at home and abroad, as well as those by foreign firms in the United States. That report concluded that improving the data on U. international capital transactions would yield high payoffs, and this report addresses that issue. Chapter 4 reviews the surge of transactions in financial derivatives and discusses their implications for the coverage and the interpretation of existing data on U. Appendix A highlights key features of the data collection systems of the United Kingdom, Germany, and Japan and discusses actions being taken by these countries to improve information on their international capital transactions. resident, and international capital transactions are those between residents and nonresidents (foreigners).In 1991 foreign banks accounted for 18 percent of total banking assets in this country and operated 565 offices (Federal Reserve Board of Governors, 1993:1).
Many of the channels used for financial transactions have also changed. This improvement in comparability, of course, would apply to the data of other countries as well.That report, (Kester, 1992), reviewed the adequacy of data on U. merchandise trade and international services transactions. It recommended steps to correct the problems of underreporting of U. They include a worldwide move toward deregulation of financial institutions and transactions; macroeconomic imbalances among countries, which have induced capital flows; improved knowledge about market and economic conditions around the world; and breakthroughs in information and communications technology that have increased exponentially the capacity for handling large volumes of financial transactions while significantly reducing unit transaction costs and making possible the use of new financial instruments.