ABSTRACT
In the name of international reserves and capital flow across national borders, in this chapter we will study how national economies affect and influence each other. Here, international reserves represent one of the central problems facing the reforms of the international monetary system since WWII. On the one hand, it touches on each nation’s ability to adjust its international payments and to stabilize its exchange rates; and on the other hand, it also deeply affects the development of the world prices and international trades. As the interdependence of individual national economies on each other gradually strengthens, international repayment behaviors of economic trades become increasingly more important day by day. The quantity, structure, and management of international reserves can directly affect the adjustment of each nation’s international payments, stability of exchange rates, and prevention of monetary crises, etc. At the same time, the flow of international capital represents the worldwide movement and transferring process of capitals across national borders. Along with the development of economic globalization, the international flow of capital has becoming the most active factor of the world economy. However, at the same time when the international flow of capital continuously promotes the growth of the world economy, it also provides the ground for wide-ranging financial crises to occur. Since the 1990s, because of the increasing occurrence frequency of major, large-scale financial crises, the international flow of capital has caught people’s attention.
