ABSTRACT
Blessed with liberal economic policies under globalization and supercomputer technology, financial assets have become globally ‘superliquid’. While economic policies have improved access to different financial products across the countries and currencies, such technology has accelerated the transactions velocity of money and financial assets. Supported by the technology, the dynamics of the market have undergone a sea change. The markets have become timeless, spaceless and super-efficient. All this has naturally made the international markets more volatile since they have become more responsive, sensitive and susceptible. It is more true of financial markets than commodity markets. This is because, in the post 1974 oil crisis era, the growth of money and financial assets has been much faster than the real output growth. The market capitalization of financial assets as a percentage of both GNP as well as money supply has increased substantially in developed and also emerging markets. The global financial market has been working like a large reservoir of interconnected pools. Any change in the level and pressure in any one pool affects the others. The degree of influence of a change in pressure in any one pool would depend upon the size of the pool in relation to the total reservoir and the degree of change in pressure in the pool.
