| The Global Financial System refers to those financial institutions and regulations that act on the international level, as opposed to those that
act on a national or regional level. The main players are the global institutions, such as IMF and World Bank, national agencies and government departments,
e.g. central banks and finance
ministries, and private institutions acting on the global scale e.g. banks and hedge funds.
Deficiencies and reform of the GFS have been hotly discussed in recent years.
History
The history of financial institutions must be differentiated from economic history and history of money. In Europe,
it starts with the first financiers and banks in the 1400-1600s in central and
western Europe. The first modern bank was Bank of Barcelona (1401); the first global financiers the Fuggers (1487) in Germany; the first stock company in
England (Russia Company 1553); the first foreign exchange market (The Royal Exchange 1566, England); the first stock exchange the Amsterdam Stock Exchange.
Milestones in the history of financial institutions are the Gold
Standard (1871-1932), the founding of IMF, World
Bank at Bretton Woods, and the abolishment of fixed exchange rates in
1973.
Institutions
International Institutions
The most prominent international institutions are the IMF, the World Bank and the WTO
- The World Bank [2] (http:/www.worldbank.org) Aims to provide
funding, take up credit risk or offer favorable terms to development projects
mostly in developing countries that couldn't be obtained by the private sector.
- The World Trade Organization (WTO [3] (http:/www.wto.org)) settles trade disputes and negotiates international trade agreements in its rounds of talks (currently
the Doha Round)
Government Institutions
Governments act in various ways as actors in the GFS: they pass the laws and regulations for financial markets and set the tax
burden for private players, e.g. banks, funds and exchanges. They also participate actively through discretionary spending. They are closely tied (though in most
countries independent of) to central banks that issue government debt, set interest rates and deposit requirements, and intervene in the foreign exchange market.
Private Participants
Players acting in the stock-, bond-, foreign exchange-, derivatives- and commodities-markets and investment banking are
Legal Frameworks and Treatises
Major Incidents
The most current incidents in
the GFS are the Asian financial crisis, the following
devaluations in Russia, Brazil and Argentina and the bursting of the Dot-Com bubble
Criticism, Discussions and Reform
Among the many critics of the GFS are
See also
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