the game of finance

An article in the Economist from last week, mentions the interplay between state and big financial institutions, that keeps or strives to keep the global capital markets in a logical rythm. International finance is vastly a fancy way of dealing at subconscious level with crisis. Everyone has nevertheless noticed that the subconscious of international markets is slumped nowadays by the instability and inconsistency of decisions. International finance would mean the world would make sense.. though there is yet a crisis to be solved.

“International finance cannot just be “fixed”, because the system is a tug-of-war between the global capital markets and national sovereignty. As cross-border financial flows have expanded and big financial institutions have far outgrown their domestic markets, finance has become one of the most globalised parts of the world economy. At the same time, finance is inherently unstable, so the state has to play a big role in making it safer by lending in a crisis in return for regulation and oversight. Governments broadly welcome the benefits of global finance, yet they are not prepared to set up either a global financial regulator, which would interfere deep inside their markets, or a global lender of last resort. Instead, regulated financial firms are overseen by disparate national supervisors (in America they are sometimes state-based). The IMF helps cash-strapped countries, but the fund was conceived in an era when capital flows were restrained. It is puny relative to the size of global markets today.” Redesigning global finance, The Economist, NOv 13th, 2008

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