国际金融英文版ch7.ppt

Chapter 7 International Financial Markets Financial Markets Financial markets are for transactions of financial assets or liabilities. They provide financing and investing for individuals, firms and governments. Liquidity is the most important feature of the financial market. Liquidity is the ease with which investors can capture an asset’s cash value. International Money Market Money market is the market for financial assets and liabilities of short maturity (less than one year). The features of money market are high degree of liquidity, low return and low degree of risk. Short-term credit market is an interbank market. It provides short-term loans with maturities of less than 1 year. International money market interest rate quotations: July 29, 2011 Eurocurrency Markets Eurocurrency market is for transactions of financial assets and liabilities denominated in Eurocurrencies. Eurocurrency is a currency held in a country other than the country the currency is issued. For example, a dollar deposit in a London bank or a Paris bank. The dollar is called Eurodollar. If a sterling deposit held in a Japanese bank, the sterling is called Eurosterling. Why does the market grow so rapidly? The causes contribute to the development of Eurodollar market include the increased regulation on banking industry in 1960s and oil crisis in 1970s. Regulation Q imposed a 5.25% ceiling on the interest rate the domestic banks could pay. Interest equalization tax (IET) required taxes on U.S. residents’ earnings on foreign securities. Credit expansion through the Eurocurrency market Bank of America HSBC (eurobank) Assets Liabilities Assets Liabilities (-) $1m deposit (+) $1m deposit (-) $1m deposit of U.S. company at Bank of America of Chinese firm (+) $1m deposit of HSBC The U.S. banki