FINANCIAL INTEGRATION 1

Financial Integration

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1. Financial integration allows financial institutions in one country to serve customers in

other countries. Financial integration gives a room for the government and private

firms to access and have more opportunities to get fund their projects as many

countries both able and less able have come together. There are also more products to

chose from incase a certain country wants to carry out a certain business or project.

Financial stability is the state by which the financial institutions and financial systems

are able to run their work and duties smoothly and are also able to withstand

economic shocks. Financial stability also refers to when the financial system is able

to handle risks. Monetary policy is the ability to be able to control the money that is in

circulation in the economy. It also refers to the channels by which money is supplied.

Monetary policy is the one that determines how the financial integration will work as

it give the record of money in the economy which help financial integration to know

how much money they can use to serve their customers.

2. It is possible to refinance an international loan to defer payment of higher interest.

When a country or a private firm has taken a loan from another country and they are

unable to pay the loan at the moment or at the agreed time, they can opt to refinance

that loan so that they can get a new loan with new and better terms that will help them

defer higher interest. They can also refinance the loan when the bank or the financial

institution redesigns their policies on loan payment interest. This will help the country

owning the loan to grow financially and invest more as the rates of interest have been

reduced. Refinancing will also make them pay off the debt quickly as they money

they own the bank will have reduced.

3. Financial regulatory reform will change the global perspective of a country when it

comes to facing financial integration and financial stability as the organization and

people will have more trust in the financial institutions as the government is involved.
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Financial regulatory reform will also change the global perspective of a country when

it comes to financial integration and financial stability as the regulations will help all

the market participants put the interests of all the consumers first. The regulations will

also help in making sure that the interest rates in the market are controlled and they

favor everyone. There will also be competitive financial system which will change the

global perspective of a country when it comes to financial integration and stability.

References

Borio, C. E., Farag, M., & Tarashev, N. A. (2020). Post-crisis international financial

regulatory reforms: a primer.

Coeurdacier, N., Rey, H., & Winant, P. (2020). Financial integration and growth in a

risky world. Journal of Monetary Economics, 112, 1-21.

Svartzman, R., Bolton, P., Despres, M., Pereira Da Silva, L. A., & Samama, F.

(2021). Central banks, financial stability and policy coordination in the age of

climate uncertainty: a three-layered analytical and operational

framework. Climate Policy, 21(4), 563-580.