The Role of Banks in the Financial Markets
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Evaluate the role banks play in world financial markets. Describe two problems with banks as international lenders associated with international debt.
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Solution Summary
The solution of 613 words discusses strategies for a more stable and efficient financial market with examples. References used are included.
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According to D'Estaing (1991), the ten point strategy formulated by the High-level Expert Group which is going to be endorsed by the InterAction Council are enumerated below. With the central banks performing their role, the strategy hopes to achieve greater transparency as well as more stable and efficient financial markets.
1. Independent central banks need to show that their monetary policies reflect price stability. This will encourage adequacy of private savings and stability in financial markets. Price stability is the final goal of monetary policy. Independent banks conduct them as they have become experienced with the financial and economic changes and putting into mind the importance of their long-term goals. Government fiscal policies need to support the banks' efforts of keeping price stability.
2. With the new financial environment in a globalized world, banks need to adapt appropriate monetary policies to will suit to it. Central banks need to collect information and learn recent advancements in technology in the financial markets.
3. To strengthen the international ...
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