Changing Links between Mature and Emerging Financial Markets
10 Pages Posted: 25 Apr 2012
Date Written: September 1, 2003
Emerging and mature financial markets are more integrated today than at any time since the First World War. Net capital flows to emerging markets have yet to return to the levels of the mid-1990s and remain significantly below those reached a century ago. However, cross-border flows provide an incomplete picture of the breadth and depth of links between mature and emerging financial markets. The range of foreigners investing in emerging markets has broadened in recent years. Local operations of foreign financial institutions are playing an increasingly important, in some cases even dominant, role in the financial systems of many emerging markets. At the same time, emerging market residents are increasingly involved in foreign financial systems, both as issuers and as investors. This special feature discusses these developments and identifies several issues for public policy arising from greater integration.
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