International capital market

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Money capital - funds that can act as a factor of production and a means for making a profit. Domestic entrepreneurs often find themselves in a situation of feeling a lack of capital.

This fact can serve as an obstacle to their effective operation and further development. At the same time, other participants in some economic relations have at their disposal temporarily free monetary resources in the form of savings. The owners of such funds have the opportunity to transfer them for use to another participant in economic relations for a certain time. The second party can profit from them, using them as investments. However, for some period it does not have the liquidity of monetary resources for their expected increase in the near future. This is how the capital market appeared, the instrument of which is money issued to business entities for a certain period for a fee and subject to repayment. At the same time, the organization that provides its funds as a loan receives some income in the form ofinterest for their use by the borrower.

The global capital market has two types of structure: operational and institutional.

At the same time, the second structure is the most common and includes official institutions (the Central Bank of the Russian Federation, international financial and credit organizations), private financial institutions (commercial banks, pension funds and insurance companies), as well as other firms and exchanges. The leading role in this group of organizations belongs to transnational banks and corporations.

The international capital market, depending on the timing of its movement, consists of three sectors: the Eurocredit market, the global money market and the financial market. Thus, the world market of financial resources is based on the provision of eurocredits for a short period of time (up to one year). The capital market has been undergoing certain changes for a longer time in terms of the increase in the volume of transactions on it since the 70s of the twentieth century. This is due to technological progress.

This capital market is often called the sphere of consortium or syndicated loans, since it is precisely such financial relations that banking consortiums or syndicates represent.

The world capital market is based on the provision of bond loans, and the beginning of its formation falls on the 60s of the twentieth century. It was with its appearance that the traditional market for foreign loans and the market for euro loans began to function in parallel. Already in the early 90sEuroloans accounted for about 80% of all international borrowed resources. The specified money capital market has the main feature - both creditors and borrowers use foreign currency for loans. Another difference in this sphere of financial relations is the issuance by non-residents of traditional foreign loans within one country, and the placement of euro loans is carried out on the markets of several states at once.