International Money And Capital Markets

Financial markets are markets for financial assets or liabilities. A useful way to categorize financial market is according to maturity.  International money and capital markets are for lending and borrowing moneys or claims to money in various currencies in demand outside the country of origin. By far the most important of such money markets are located in Europe called the Euro-currency markets. Asian currency market is located in the East.  Although US dollars are most frequently traded in these markets, any internationally convertible currency which has a demand and supply can also be traded. As in the case of international money markets represented by Eurocurrency markets or Asian currency markets, there are international capital markets as well, represented by Euro-bond or Asian-bond markets, which reflect the lendings or borrowings at the long-end of the liquidity spectrum of five years and above. While such international money markets have developed in the fifties, the corresponding capital markets have grown in the sixties.  Both the money and capital markets of this type for off-shore funds were of recent vintage, when the old sources of funds under the pre-war system of borrowing from the domestic money and capital markets of New York and London etc., had dried up. Domestic money markets in the post-war world were greatly insulated from foreign money markets in most cases due to the prevailing exchange controls in the interest of pursuit of independent domestic monetary policy, but the interactions and effects of one on the other could not be completely ruled out. Trading in these currencies is both for short-term and long-term and in any of the currencies which are convertible. The bonds or certificates can be denominated in any convertible currency in which the borrower and the lender have confidence in terms of the stability of the currency, its future value and intrinsic strength of the economy.