ABSTRACT
Finance is the art of passing currency from hand to hand until it finally disappears. Robert W. Sarnoff (1919-1997), ex-chairman of RCA
The integration of financial markets is an important landmark on the road to globalization. In the move towards a global resource base, no other market has exhibited the same degree of maturity in terms of globality. The advocates of financial globalization claim that moves towards integrated capital markets are essential pre-requisites if the global economy is to generate increased trade, economic growth and development. Despite these positive aspects, global financial markets can be a destabilizing force within the global economy. This chapter is based around these two contrasting themes. The chapter first explores the strategic importance of the international monetary system (IMS), tracking its evolution and how it is managed, before leading to an examination of the emergence of global financial capitalism. Thereafter, market failure, notably the recurrent financial crises that have become a feature of the IMS, is addressed. In the light of these issues, it concludes with a discussion of the major issues on the agenda for reform of the IMS in the aftermath of the global financial crisis of 2008 to 2009.
