The New Wave of Liquidity
Journal of Financial Transformation, Vol. 2, pp. 7-21, August 2001
15 Pages Posted: 8 Jun 2004 Last revised: 8 Jul 2009
New disruptive technologies have had two major influences on the world of business. Firstly, they have created significantly more efficient mediums of exchange for goods and services, thus enabling individuals to liberate value embedded within many of the assets they own more efficiently. These assets can be either currently recognized, such as stocks and bonds, or unrecognized, what we describe as "new asset classes." Secondly, they dramatically shifted the focus of power away from those that supply these goods and services to those that buy them. This shift has resulted in a growing recognition that individuals, as the ultimate benefactors, should also have the option to decide how they wish to liberate the value tied down within the assets they own. They would also like to be able to decide whether they wish to dispose of the underlying asset outright or secure its future revenue potential. Before we get to that stage, however, the current frictions that exist within today's even more efficient financial markets need to be mitigated, if not eliminated. This paper highlights the potential savings that can accrue from eliminating many of the frictions that exist within today's global financial markets and how these savings could impact global liquidity. In addition, this paper describes the process that the "new asset classes" need to go through before they can be truly liberated.
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