1、IS FINANCIAL GLOBALIZATION BENEFICIAL?,Frederic S. Mishkin,Part 1 Introduction,We are in the age of the second great wave of economic globalization The first occurred from 1870 to 1914. The second from 1973 until today Economic globalization is far from completeCapital primarily flow rich to rich, r
2、ather than flow rich to poor A paradoxWhy has not capital flowed from rich to poor?paradox ：悖论、反论,A paradoxWe know that labor is incredibly cheap in poor contries, so the capital would be very productive there.while ,the mount of capital flowing to developing countries is only one-fifth of total int
3、ernational capital flows.A remarkable phenomenonCapital flows from rich to poor relative to total capital are far smaller than they were in the first Age of Globalizationremarkable：值得注意的,In addition,financial globalization is highly controversial among economist.Brain is more important than brawncon
4、troversial：有争议的，有争论的brawn：发达的肌肉,Part 2 What impedes financial development?,Government,control,design,direct,establish,collateral,legal system,the fiow of funds,regulatory system,less incentives,inefficient,weak,Transparency,diffcult to enforce,restrictive covenants,expensive and time consuming,legal
5、ly own,Is China a Counter Exampie?,As we all know,our property rights,legal system and transparency are quite weak by advanced country standards.Yet China has been one of the highest growth rates in the world over the last twenty years.How did we get it?what should we do next?,Part 3 Financial Crisi
6、s,Why does not opening up financial markets always work?The answer is that opening up an economy to international capital,particulary if it is not managed properly,can lead to financial crisis that are disastrous to the economy,Mismanagement of Financial Globalization,Fiscal Imbalances,Runp to curre
7、ncy crisis,Currency crisis,Financial Crisis,culprit:元凶；罪犯,Stage one:Mismanagement of Financial Globalization,Banks do not have the required expertise to manage risk appropriately.Then,they begin to lose.The loss deteriorate the balance sheets of banks,thereby driving down the net worth of the bank.T
8、hen banks cut back on their lending, firms are no longer able to fund their attractive investment opportunities; thereby decrease their spending and economic activity contracts.deteriorate:恶化,Stage one:Mismanagement of Globalization,If the deterioration in bank balance sheets is severe enough,a bank
9、 panic may ensueThe solution to preventing a lending boom and bust is prudential regulation and supervision of the banking system to prevent banks from taking on excessive risk.severe:严重的 ensue：跟着发生 boom:繁荣bust:破产 prudential: 谨慎的；明辨的,Stage One: Severe Fiscal Imbalances,Fiscal imbalances entail subst
10、antial budget deficits that need to be financed.The imbalances are so large that it is diffcult for government to repay the debt.Then the banks that are holding this debt have a big hole on the asset side of their balance sheets, with ahuge decline in their net worth.entail：导致,The different routes b
11、oth deteriorate the balance sheets of banks,and finally cause an economic contractiondeteriorate：恶化 contraction：衰退；收缩,Stage two:Runup to the Currency Crisis,Higher Interest Rates and their Effects on Cash Flow. Increases in Uncertainty and the Decline in Lending.Declining Asset Prices and the Declin
12、e in Net Worth.The three factors influence the cash flow of firms,the lending of banks and the net worth of corporations and lead to decreased lending and economic activity.,Stage three:Currency Crisis,The deterioration in balance sheets of banks and severe fiscal imbalances are the two key factors
13、that trigger the currency crisis.If they raise interest rates too much they will destroy their already weakened banks, and if they dont they cant maintain the value of their currency.deterioration:恶化,Final Stage:Financial Crisis,In emerging market countries,almost all bank lending is very short-term
14、.Currency crisis can lead to a depreciation of the domestic currency .And then increase the debt burden of domestic firms if their debt are denominated in foreign currency.The collapse of a currency also can lead to higher inflation .,Part 4 Conclusion,Undoubtedly,financial development is a key element in promoting economic growth.However, as we haveseen,it can go very wrong if a country doesnt manage the process properly.The issue is thus not whether financial globalizationis inherently good or bad, but whether it can be done right.,Thanks for your attention !,
