Global Financial Markets:

Basically global financial markets comprise of both domestic and international markets that are used by multinational corporations, government agencies, and banks in the conduct of their business. In other words the global financial markets contains international capital markets, the market for foreign exchange, the Eurocurrency and related money markets, the Eurobond and global equity markets, the commodity market and the markets for forward contracts, options, swaps and other derivatives. The markets and institutions of international finance have, in recent years, undergone significant changes. To great extent the institutions that dominated global finance in earlier decades -commercial banks and supranational organizations like the International Monetary Fund- have been displaced by disintermediated, private finance. There has been a huge shift of expertise and market power away from banks and towards corporations, with the latter increasingly issuing commercial paper, bonds and medium term notes, and managing their financial risks internally. Some have created finance subsidiaries that have become powerful financial service firms in their own right. Banks' functions have widened accordingly: a few have become more like investment banks, performing underwriting and distribution of securities to investors rather than lending money themselves. Many have developed capabilities in risk management instruments, such as options, swaps and more complex derivatives. All successful market participants must have a far more sophisticated understanding of financial risks, and of the tools to manage them, than was once the case. The asset-liability management task in commercial banks has become more complex due to an increase in the variety of products, both on and off their balance sheets. The International Monetary Fund, which was initially designed to resurrect the post-World War II international monetary system, has become a lender to less developed countries in financial distress and no longer performs in the main arena of the international financial circus. National capital markets have gained importance, to some extent at the cost of external markets like the Eurobond market, as barriers are eroded and domestic institutions face the harsh wind of international competition.