Here are Functions Performed by the Global Financial System and The Financial Markets.

 The function of global financial system are numerous, it’s part of our daily living activities and how we survive as a particular country.

We have seven outstanding functions of global financial system, there are:

1.       Credit function: Credit comprises of a loan of funds which in return the debtor promised to repay the fund in the future. The global market make out fund for finance consumptions and investment spending. Businesses, individuals, federal government, and other needs credit for an easy living and execution of duties. The business stand in for credit to stock their warehouses, buy new equipment for production, meet payroll for their employees and construct new building for business and quit a lot of other things.

 

2.       Policy function: In this era, the government has form a policy through the financial market to stabilize and control the economy of the country in order to avoid inflation , by setting standard for interest rates and available credit for citizens, they have  been able to affect borrowing and spending plans for the public, making the country comfortable for all. This policy set by the government influence the growth of jobs, production, and prices of production and consumption. As we know the risk of economic realization has been given to countries’ central banks, and other financial institution. 

 

               photo credit: vanguardngr.com

3.       Payments function: Global financial system also gives rooms for devices which are used to make payments for goods and services across countries of the world. There are many method which are used in making payment in the global financial system. These are: checking account and negotiable order of withdrawal, electronic means of payment and the use of plastic card payment.

 

4.       Liquidity function: In today’s world, money is consists mainly of deposits held in banks and is the only financial instrument possessing perfect liquidity. When the financial instrument is used to stored wealth, the global financial market provides a mean so as of converting those instrument into cash with little risk of loss. Thus the world’s financial market provide liquidity: that immediately spendable, for savers who hold financial instruments but are in need of money.

 

5.       The risk function: The financial markets across the world protects the consumers, individual, businesses and government, against risk, that they encounter through their during life activities. The financial market achieved these through providing the sales of insurance policies, when we have different types of insurance that helps to make life easier by taking care of the risk we come across daily.


 

photo credit: worldfinance.com

6.     Savings function: The global financial system provides some potential profitable, low-risk term for the public’s savings, which flows through the financial markets into investment, that’s helps to increase the production of goods and services. In not sheer, the global financial system, makes saving of fund easier for the households and business firm, through trading low-risks securities in the financial markets.

In conclusion, the functions performed by the global financial system and the financial markets are like the sands of the earth, since it has vast contribution to every countries of the world.

what do you think?

 

 

  

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