Main point from the video
From the video, the most important point is that economic growth is the key determinant of social economic and political stability, and attainment of such growth through capitalism should be approached as a spectrum rather than in a dogmatic manner. At this point, the speaker notes that neither the market-based capitalism nor state based capitalism provides all the social and political solutions in the society. Models should thus be blended to come up with the optimal approach to economic growth and development if we are to meet the emerging challenges including fast growth in population, where the UN expects that the world will have a total of 11 billion people by 2100 (Moyo, 2015).
Challenges to development of global capital markets
Exchange rate
The global capital markets operate with different currencies. The value of these currencies fluctuates from time to time resulting in losses or gains among players in the international capital markets. Such instability in currency value thus limits chances of developing fully globalized capital market (Moyo, 2015).
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Politics
Another challenge to the development of a truly global financial market is politics. Some countries are currently facing trade sanctions when they fail to abide by the desired economic, political and social way of operations, thus barring them from being active participants in the international capital markets. Such countries include North Korea and Iran among many others (Moyo, 2015).
Truly global capital market
A truly global capital markets should have freely floating exchange rates, unlike today where countries such as China are engaged in the internal management of their exchange rates. At the same time a truly global market call for uniform interest rates. Nevertheless, each of the developed and developing countries has their specific approaches to monetary policy and differing macroeconomic goals. Attaining a universal interest rate would thus be difficult to realize. The 2008 financial crises in the United States of America led to similar crises in Europe due to the interconnectedness of international financial markets, making countries such as China wary of adopting a fully integrated international financial system and capital markets (Moyo, 2015).
National of global currency
Shifting from local currency to a global currency has some merits and demerits to the government and businesses.
Merits
A regional or global currency would enable users to do away with the risk and loss that occurs in businesses due to currency value fluctuations during an exchange. At the same time, businesses would not be pushed to engage in forwarding contracts to hedge the risk of fluctuation, eliminating then hedging costs. To governments, a universal currency would make the foreign debt value more predictable as the currency of the lending country would be the same as the currency of the borrowing country. At the same time, the price of imports and exports would be harmonized as the value would no longer be adversely affected by changes in currency. It would equally be easier for people to travel under one currency, from one country to another (Moyo, 2015).
Demerits
A global currency would deny countries control of their financial policy. It would be difficult to independently control their monetary policy. Potential sabotage in the printing of a common currency by the powerful nations would be to the detriment of weak nations.
Gold standard
The insufficiency of Gold would limit the adoption of the gold standard in global currencies. At the same time, Gold is not the only reserve. Countries that have unique human resources yet with no Gold would be at a disadvantage.
Money laundering
Money laundering should be prevented in the economy. It refers to the process through which people hide and disguise the true origin or ownership of the proceeds from their criminal activities. Failure to control such crime enables the criminals to recycle the money and commit even bigger crimes.
References
Moyo, D. (2015). Economic growth has stalled: lest fix it . Retrieved from
https://www.ted.com/talks/dambisa_moyo_economic_growth_has_stalled_let_s_fix_it?utm_campaign=tedspread--a&utm_medium=referral&utm_source=tedcomshare
