To what degree are global financial markets shaped by private authorities?

Measuring the influence of private financial companies on global markets is done by several international agencies. The monitoring and reporting by these agencies assure global investors the movement of financial resources across the globe is secure. All participants in the global market have stakes in making sure private companies are financially stable and able to meet the financial needs in the markets they operate.

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The influence of international private financial companies on global markets has two components. The first is the relatively transparent component, and the impact of these companies' decisions is readily observable in public policy decisions and the economy of a region. This component is measurable by statistical analysis, such as the GDP of a country. It is monitored by various global exchanges and international financial agencies. The second component is not transparent. It is the political influence that results in governments changing policies that affect global markets.

Private companies' role in global markets is measurable by the amount of capital accumulated in various financial markets in the world. Capital flows to areas of least risk and where the highest amount of return on investment can be safely secured. An example of this principle is foreign investors are particularly keen on investments in American assets such as real estate, various government bonds, and securities.

Another way to look at the transfer of capital from one part of the world to another is to consider the financial resources are not available to be reinvested in the country that generates the capital for investment. Multinational companies move money to where it benefits the company (i.e., stockholders) the most. The shift affects everything from interest rates to small business loans to consumer loans such as mortgages. International and national regulations govern private financial companies, and as a result, these types of transfers are monitored. Any country that participates in the global economy has an interest in monitoring and making sure global transactions are stable. In this instance, the global financial companies, stockholders, and international and national governing authorities are keenly interested in making sure global financial markets remain stable.

The influence exerted on international governments by private companies or the impact on individual companies by command economy governments is much less transparent. For example, manipulating the value of the currency of a country dramatically affects the price of goods. Private companies may want to encourage or look the other way when a country manipulates the value of its currency. There is no real way to measure how many policy decisions at the highest levels of government are partly due to the influence of private companies. What is known is that it occurs. And, what is known is that the public will find out after something catastrophic happens in the financial industry. History provides several pieces of evidence to this statement.

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