Globalized markets emerged in the 80s and 90s following the integration between various governments that had deregulated their foreign exchange. The consequence of deregulation of financial markets was heightened competition in the provision of services Companies in the U.S., Japan, and even developing economies such as China and Korea listed their shares across national borders to facilitate investment (Eun & Resnick, 2015). Advancements and innovations in technology also played a role in the emergence of globalized financial markets. The advantages of globalized financial markets are numerous. First, economies were presented with diverse options that fostered growth in the economy. Secondly, there is a decreased risk of fines from global institutions.
The advent of the euro since 1999 has brought revolutionary changes in the European financial sector. An example is the redenomination of bonds and stocks from different nations into a single currency. Consequently, this resulted in the emergence of global markets that are comparable to those in the U.S. The euro has been beneficial as countries can now raise capital in favorable terms with Europe.
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Globalization, though, requires that a balance be stricken between imports and exports. Failure to which it can cause a severe setback for a country’s economy. For example, in 2009, the euro worsened Europe's financial crisis when the deficit was increased from 3.7 to 12.7. In a year, investors had withdrawn from Europe. Greece, which was responsible for inflation, no longer had the power of depreciating the national currency. To avoid such incidences in the future, federal governments must ensure an inflow of cash after spending.
References
Eun, C. S., & Resnick, B. G. (2015). International financial management (7th ed.). https://redshelf.com
