© 2015 albert-learning.com International Finance

© 2015 albert-learning.com International Finance What is International Finance? International finance (also referred to as international monetary economics or international macroeconomics) is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.

© 2015 albert-learning.com International Finance  Macroeconomic - connected with large economic systems, such as those of whole countries or areas of the world  Monetary - connected with money, especially all the money in a country  Dynamic – the way in which people or things behave and react to each other in a particular situation  Consequence - a result of something that has happened  Borrow - to take money from a person or bank and agree to pay it back to them at a later time  Efficient - doing something well and thoroughly with no waste of time, money or energy  Transaction - a piece of business that is done between people, especially an act of buying or selling Vocabulary

© 2015 albert-learning.com International Finance  Exert - to use power or influence to affect somebody/something  Lend - to give money to somebody on condition that they pay it back over a period of time and pay interest on it  Allocation – an amount of money, space, etc. that is given to somebody for a particular purpose  Vital - necessary or essential in order for something to succeed or exist  Facilitate - to make an action or a process possible or easier  Advisory - having the role of giving professional advice  Encourage - to make something more likely to happen or develop Vocabulary

© 2015 albert-learning.com International Finance Some of the Benefits of International Finance are:  Access to capital markets across the world enables a country to borrow during tough times and lend during good times.  It promotes domestic investment and growth through capital import.  Worldwide cash flows can exert a corrective force against bad government policies.  It prevents excessive domestic regulation through global financial institutions.  International finance leads to healthy competition and, hence, a more effective banking system.  It provides information on the vital areas of investments and leads to effective capital allocation.  International finance promotes the integration of economies, facilitating the easy flow of capital. The free transfer of funds would eventually result in more equality among countries that are a part of the global financial system.

© 2015 albert-learning.com International Finance More on International Finance:  International finance is a consequence of multiple currencies  It is also a consequence of intertemporal trade i.e. trade across time, as when a country imports in one time period paying for the imports with exports in a different time period, earlier or later.  It is also the interaction of the two that is really important — the fact that many countries borrow in currencies that differ from their domestic ones.  International Financial System is crucial to efficient organization of international economies.

© 2015 albert-learning.com International Finance International Finance – Regulatory Bodies Different aspects of international finance are regulated by various global bodies. These global institutions include the World Bank, International Finance Corporation, World Trade Organization and the International Monetary Fund.  The World Bank is in charge of funding development projects that do not receive sponsorship from private investors.  The IMF monitors financial transactions between its member countries.  The World Trade Organization (WTO) deals with the global rules of trade between nations.  The International Finance Corporation is an international financial institution that offers investment, advisory, and asset management services to encourage private sector development in developing countries.

© 2015 albert-learning.com International Finance 1) What do you understand by Finance? 2) Do you think that world has become a big one market? How? 3) Can you name some of the world’s famous artists? 4) Do Millions justify Picasso’s work? Conversation

© 2015 albert-learning.com International Finance Reviewed By Reviewed On Comments / Changes Made Mayuri Formatted the 2 nd,3 rd,4 th and the 8 th slide