This week, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness released a new report, International Financial Markets: A Diverse System is the Key to Commerce, which presents a number of thoughtful and fact-based observations about the role of the financial sector and capital markets in the global economy. Authored by Dr. Anjan Thakor, John E. Simon professor of finance and PhD program director at the Washington University in St. Louis Olin School of Business, the report offers an overview of how a diverse global financial system works to spur economic growth and job creation by providing the necessary products and services businesses and individuals need to succeed.
The report also outlines a number of conclusions about the importance of international financial markets ranging from promoting global trade, to providing capital and financing for businesses of all sizes, and facilitating risk management. Dr. Thakor explains that understanding how the global financial system works and how to support it is vital as regulators across the world continue to look to modernize or alter the regulatory landscape. The report further cautions that while an effort to harmonize financial regulations is underway, the cumulative impact of regulatory reforms on the economy must also be taken into consideration, as excessive regulation could impede economic growth and job creation.
Additionally, the Chamber released an interactive infographic, Capital Markets: The Key to Commerce, which illustrates how the businesses of all sizes rely on the products and services offered by the global financial sector and capital markets to start and grow their businesses as well as compete in the global economy. For example, the infographic shows how a farmer works with a regional bank and uses derivatives to stabilize crop prices, how a manufacturing company uses products such as over-the-counter derivatives to hedge natural gas prices, and how a department store works with a global bank and uses corporate bonds to finance a technology upgrade.
Being a global financial leader is an enormous strategic advantage for the U.S. economy and American businesses, workers, savers, and investors. For those seeking a straightforward deep dive into why we need a diverse financial system that includes institutions of all sizes, business models and areas of expertise to keep our economy growing, the Chamber’s report and accompanying infographic are must-reads.