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Report On International Banking and Money Market
Report On International Banking and Money Market
Report On International Banking and Money Market
School of
Computer Science & Engineering
Lovely Professional University,
Phagwara
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S.No. Contents Page No.
1 Introduction: International Banking 3
2. Benefits 3-4
3. Features 4-5
9. Conclusion 15
10. References 16
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Introduction: International Banking
An international bank is a financial entity that offers financial services, such as
payment accounts and lending opportunities, to foreign clients. These foreign clients
can be individuals and companies, though every international bank has its own
policies outlining with whom they do business.
International banking is just like any other banking service, but it takes place across
different nations or internationally. To put in another way, international banking is an
arrangement of financial service by a residential bank of one country to the residents
of another country. Mostly multinational companies and individuals use this banking
facility for transacting.
BENEFITS
• Tax: Take advantage of overseas tax rates, conditions and privacy laws with
an offshore bank account. For example, you might open up an international
bank account based in a country that has lower tax on investment income
than Australia does.
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• Privacy: Sensitive financial information may be safer overseas, in an
anonymous account, than in a standard domestic bank account. If your
occupation requires you to protect sensitive client information, or your own,
then an international bank account may be preferable.
• Multiple currencies: With a standard bank account you will typically need to
exchange money through the bank or a third party, paying fees and exchange
rates on that transaction. International bank accounts typically use more types
of currency with more fluidity.
• International money transfers: If you keep making international money
transfers through a domestic bank account, you can very quickly spend a
large amount on fees and currency exchange rates. An international bank
account typically lets you do it with preferable rates and at a lower cost.
• Linked accounts: Depending on your preferences, you may link other
accounts to your international bank account to earn interest on them or enjoy
other benefits.
• 24-hour service: Domestic Australian banks usually run on standard
business hours, but international accounts need to be manageable and
accessible 24 hours a day. Choosing an international bank can get you easier
access to your account around the clock.
FLEXIBILITY
International banking facility provides flexibility to the multinational companies to deal
in multiple currencies. The major currencies that multinational companies or
individuals can deal with include euro, dollar, pounds, sterling, and rupee. The
companies having headquarters in other countries can manage their bank accounts
and avail financial services in other countries through international banking without
any hassle.
ACCESSIBILITY
International banking provides accessibility and ease of doing business to the
companies from different countries. An individual or MNC can use their money
anywhere around the world. This gives them a freedom to transact and use their
money to meet any requirement of funds in any part of the world.
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INTERNATIONAL TRANSACTIONS
International banking allows the business to make international bill payments. The
currency conversion facility allows the companies to pay and receive money easily.
Also, the benefits like overdraft facility, loans, deposits, etc. are available every time
for overseas transactions.
ACCOUNTS MAINTENANCE
A multinational company can maintain the records of global accounts in a fair
manner with the help of international banking. All the transactions of the company
are recorded in the books of the banks across the globe. By compiling the data and
figures, the accounts of the company can be maintained.
Correspondent Banks
Correspondent banking implies a relationship between at least two banks, including
those in differing countries. Multinational corporations (MNCs) may utilize these
banks for conducting global business, according to the University of Michigan.
Correspondent banks are usually small, and may have representative offices serving
MNCs outside of the bank's home country.
Representative Banks
A representative office is an office established by a company or a legal entity to
conduct marketing and other non-transactional operations, generally in a foreign
country where a branch office or subsidiary is not warranted
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Foreign Branch Banks
These banks operate in countries foreign to the parent bank to which they are legally
tied. They must abide by banking regulations established in the home and host
countries, according to Investopedia.com.
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Introduction: International Money Market
The international money market is a market where international currency
transactions between numerous central banks of countries are carried on. The
transactions are mainly carried out using gold or in US dollar as a base. The basic
operations of the international money market include the money borrowed or lent by
the governments or the large financial institutions.
The core of the international money market is the Eurocurrency market. A
Eurocurrency is a time deposit of money in an international bank located in a country
different from the country that issues the currency. For example, Eurodollars are
deposits of U.S. dollars in banks located outside of the United States.
The international money market is governed by the transnational monetary
transaction policies of various nations’ currencies. The international money market’s
major responsibility is to handle the currency trading between the countries. This
process of trading a country’s currency with another one is also known as Forex
Trading.
The international money market handles huge sums of international currency trading
on a daily basis. The Bank for International Settlements has revealed that the daily
turnover of a traditional exchange market is about $1880 billion.
A money market is one of the safest financial markets available for currency
transactions. It is often used by the big financial institutions, large corporations, and
national governments. The investments made in money markets are usually for a very
short period of time and therefore they are commonly known as cash investments.
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IMPORTANT OBJECTIVES OF MONEY MARKET
• The money markets not only help in the storage of short-term surplus funds but
also help in lowering short term deficits.
• Money markets helps the central bank in regulating liquidity in the economy.
• Money market assists the short-term fund users to fulfill their needs at a very
reasonable rate.
• It helps in the development of capital market and trade and industry.
• Money markets help in designing effective monetary policies.
• It also facilitates in streamlined functioning of commercial banks.
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Helps in Financial Mobility
The Monet market helps in financial stability by smoothening the transfer for funds from
one sector to another. And, financial mobility is important for the development of
commerce and industry.
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INTERNATIONAL DEBT CRESIS
Debt crisis is a situation in which a government (nation, state/province, county, or city etc.) loses
the ability of paying back its governmental debt. When the expenditures of a government are
more than its tax revenues for a prolonged period, the government may enter into a debt crisis.
Various forms of governments finance their expenditures primarily by
raising money through taxation. When tax revenues are insufficient, the government can make
up the difference by issuing debt.
A debt crisis can also refer to a general term for a proliferation of massive public debt relative
to tax revenues, especially in reference to Latin American countries during the 1980s, the United
States and the European Union since the mid-2000s, and the Chinese debt crises of 2015.
On 12 August 1982, the Mexican government announced that it could not meet its forthcoming
debt repayments on its $80 billion of outstanding debt to international banks. This was the first
sign of the international debt crisis. Soon after the Mexican announcement a number of other
less-developed countries (LDCs) announced that they too were facing severe difficulties in
meeting forthcoming repayments. Throughout the 1980s and 1990s the problems faced by the
LDCs in servicing their debts has been one of the major international policy issues.
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DATA APPLICATION AND ANALYSIS
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THE EFFECTS OF INTERNATIONAL BANKING IS SHOWN IN
THE GRAPH BELOW:
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Analysing the shares of the particular countries in the total
asset of top 100 Global Banks in the world for the year
2015-2016.
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Major banks in Netherlands and their trend in last 4 years.
Bank Of America:
Total Revenue, Net Income and Profit Margin of Bank of
America from 2012 to 2016.
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We can see in the above graph that the financial year 2014
was not good for the Bank Of America and due to that It was
not able to make more profit compared to past few years.
CONCLUSION
Globalization and growing economies around the world have led to the development
of international banking facility. The world is now a marketplace and each business
want to exploit it. Geographical boundaries are no more a concern. With access to
technology, banking facilities have grown vastly. One prime example of it is
international banking. In the years to come, such banks would see higher growth and
higher profitability. Big business houses are expanding themselves at a rapid pace.
To maintain the growth, these businesses will need the financial services of
international banking. Therefore, the demand for international banking facilities will
increase.
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REFERENCES
https://money.howstuffworks.com
https://bizfluent.com
https://efinancemanagement.com
https://www.tutorialspoint.com
https://www.coverfox.com/
https://tradingeconomics.com
https://link.springer.com/
https://www.slideshare.net
https://www.bankofamerica.com
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