Domestic and Global Markets

Question 1

Over the past few decades, how have the relationship between Australian and international markets developed?

Answer 1

With a dramatic increase in levels of international investment in and from Aus, Australia’s financial sector has become more integrated with the global financial market.

Question 2

What are some events that provide evidence of Australia’s integration in the global financial market?

Answer 2

Great Depression, GFC, increases of interest rates in 1970’s

Question 3

What has allowed a greater integration of Australian financial market into the global market?

Answer 3

Advances in information and telecommunications technology, which have lowered communication costs, increased the reliability and speed of the electronic transfer of funds. Deregulation of Australia’s financial market encouraged foreign participation.

Question 4

What do foreign exchange markets enable?

Answer 4

The transfer of funds around the world.

Question 5

Why are global debt markets important to Australia?

Answer 5

Australia has a reliance on foreign borrowing. The four major banks source finance for domestic loans from overseas.

Question 6

What is the level of global integration of equity markets?

Answer 6

Equity markets generally exist within individual countries. But some regional markets exist. International movement of funds between equity markets is controlled by banks.

Question 7

What are the main regulators of global financial markets?

Answer 7

The Bank for International Settlements

The International Monetary Fund

Question 8

What is the role of the Bank for International Settlements?

Answer 8

It is an international organisation that helps central banks promote financial stability through appropriate market regulations

Question 9

What is the role of the International Monetary Fund?

Answer 9

It oversees the stability of the International financial system, through monitoring economies and helping economies fulfil international financial obligations

Question 10

What are some of the benefits of global financial markets?

Answer 10

They allow Australians access to foreign capital to invest in houses and businesses, avoiding higher borrowing costs and enabling easy access to finance. Also offers Australians opportunity to invest and earn returns from overseas businesses.

Question 11

What is the main disadvantage of global financial markets?

Answer 11

Regular disturbances in overseas markets are more quickly transmitted to Australia.