International financial integration

Description

In the past two decades, national financial markets in the major industrial countries have undergone a revolutionary change. Market pricing has replaced price-setting by government regulation or market conventions, and the removal of capital controls has opened national markets to international competition. Along with changes in markets has come improved understanding of how interest rates across different currencies are related. This study examines the progress in integrating the financial markets of the Group of Five (G-5) industrial countries: Britain, France, Germany, Japan and the United States. Professor Marston shows that deregulation and liberalization have succeeded to such an extent that interest rates in any single currency are nearly the same regardless of whether they are offered in national or Eurocurrency markets. Currency denomination remains a barrier to full financial integration, however, since both nominal and real returns on financial instruments vary widely by currency, even between currencies tied together by the European Monetary System. This study examines relative returns in the money and bond markets of these countries, investigating whether there are systematic variations in relative returns across currencies.

First Sentence

The industrial countries emerged from World War II with controls on virtually all types of international transactions.

Excerpt

The industrial countries emerged from World War II with controls on virtually all types of international transactions.

Subjects

Series Statement

• Japan-U.S. Center Sanwa monographs on international financial markets

Other Editions

• International financial integration: a study of interest differentials between the major industrial countriesCambridge University Press1995-01-01
• International Financial IntegrationPaperbackCambridge University Press1997-04-13
• International Financial IntegrationUniversity of Cambridge ESOL Examinations2021-01-01