POLS 1160 Lecture Notes - Lecture 15: Capacity Building, Moral Hazard, Technology Transfer
22 Mar 2017
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Document Summary
Global finance: changed forms of money, spread of transborder currencies, distinctly supraterritorial denominations, digital cash, global credit cards. Cross-border investment: portfolio: investor has no role in management, bonds, net value specified at time of sale, loans. Issued by gov. or firms: terms, but not value-set at the time of sale. Innovation in financial sector in the last 30 years: hedge funds and investment banks created new products, unregulated, no safeguards, no insurance. Insurance: someone else pays if you get in trouble: moral hazard: insurance reduces incentives. Role of imf: cooperation through an institution. Imf was created in the recognition that monetary and financial markets are prone to socially disastrous failure. Imf turned from monetary insurance institution into a financial power in mid- 1970s. Benefits: provides information, can facilitate agreement that otherwise would be difficult. Criticisms: financial standards and information, negligible impact on preventing crises, negotiations nondemocratic.
