Development of global financial markets
Times have changed since wealth was measured in terms of salt,
corn, or gold coins. Even paper money is losing value as the nearly 200 million
Visa credit cards accepted in 6.5 million stores throughout the world are used
to transact about $650 million in business every day (Toffler 1990, p. 61).
Including other credit cards, the figure is five times this amount. In addition,
a huge number of transactions are carried out using cheques, shares, money
orders, and so on. As a result of the information revolution, a growing volume
of financial operations is carried out with electronic money. The
trend is clearly toward more widespread substitution of paper-based transactions
with electronic operations.
The development of this virtual framework has made
international monetary systems more volatile; financial and commercial
transactions can be carried out at a speed that is changing the rhythm of
political and economic events. Financial decisions are made at a moments
notice, at any hour of the day or night. Global markets never close. Effects are
almost instantaneous. When a major financial operation takes place or an
economic policy announced, repercussions can be felt throughout the world in a
matter of minutes.
A further consequence of the information-based management of
money has been the internationalization of money markets and a subsequent
blurring of financial borders. There are increasing ties between currencies and
national governments are experiencing greater difficulty in defining autonomous
Somewhat paradoxically, however, financial trends are developing
on their own. It is becoming increasingly difficult to control
markets, as many more people, acting on their own, are making many more
decisions over short periods of time. Central banks are having problems ensuring
the stability of national currencies or the behaviour of other financial
This situation is exacerbated by the similarly widespread
automation of markets and the development of new, early forecasting programs.
There are a dozen firms...managing more than 100 million dollars [US] each
on the basis of advice generated by computers (Economist 1993a, p. 3).
Growing numbers of mathematicians and computer experts are dedicated to
predicting market trends by computerized nonlinear forecasting and other tools
that increase the speed and accuracy of financial decisions. The effects of this
practice are not yet wholly understood, but they are already playing a role in
the globalization trend and in liberating at least some aspects of the financial
market from monopolistic