Global Capital and Foreign Exchange Markets in International Management Context
International economic, political and cultural relations cause monetary demands and commitments of juridical entities and citizens of different countries. Specifics of international exchange markets is that as the currency of payment and price are usually used foreign currencies, as there are yet no globally accepted credit money that may be used in all countries. Meanwhile, every sovereign state as a legitimate means of payment has its national currency. Therefore, a necessary condition for the settlement of foreign trade, services, loans, investments, interstate payments is the exchange of one currency to another in the form of purchase or sale of foreign currency by the payer or recipient.
Exchange markets are the official centers where there are performed buying and selling foreign currencies to the national at the exchange rate formed on the basis of supply and demand (Harvard Business Review). International payment transactions related to the payment of the monetary obligations of juridical entities and private persons from different countries are performed by the foreign exchange market.
The foreign exchange market, in the broadest sense is the sphere of economic relations arising in the implementation of operations on purchase and sale of foreign currency, as well as operations on the movement of capital from foreign investors. There is a coordination of interests of investors, buyers and sellers of currency values in the exchange market. The foreign exchange market with the organizational and technical point of view is a total network of modern means of communication between the national and foreign banks and brokerage firms.
Economic globalization means emancipation from national and social responsibility. National borders are inviolable by the loss of the meaning of their existence. Capital disclaims burdensome social obligations and freely migrates to where taxes and wages are lower, and the responsibility of decision-makers is minimized as much as possible (Harvard Business Review). The process of globalization is transforming the nature of finance capital, when the monetary component is separated from the productive and begins to function and develop itself as an independent entity.
Moreover, it modifies itself to industrial capital, making it a secondary and dependent on its implementation and trends. Capital becomes not just money, but active financial resource capable of functioning anytime and anywhere within the context of international management. This stage of modern money-capital shares the property and capital function in space and time. Capital becomes an asset that is held for movement on any territory and at any time. At the same time, information and communication technologies allow money to move the market instantaneously and rapidly, which increases the possibility of management.
There is erosion of capital as property and enhancing its functionality. So, the main task for managers is not to control the production of profit and the movement of assets, financial flows. It turns out that in the context of globalization of capital, the process of separating ownership of the capital function is completed. Thus, the financial capital turns into a pure money-capital with functional tasks.
In the time of globalization there is an interdependence and interrelation between the economies as well as there is a diffusion of capitals. Thus, the process of establishing international relations is significantly facilitated by the cooperation and creation unions. On the other hand, the situation on global market may be influenced by the single economy. In this case only united efforts should be used for a successful economics.
Reference
Rose, A. (1999). Does a Currency Union Boost International Trade? (1st ed.). Berkeley. Retrieved from http://faculty.haas.berkeley.edu/arose/CMR.pdf
Harvard Business Review,. (2003). Abraham Lincoln and the Global Economy. Retrieved 1 February 2016, from https://hbr.org/2003/08/abraham-lincoln-and-the-global-economy
Harvard Business Review,. (1995). Who Rules the World’s Financial Markets?. Retrieved 1 February 2016, from https://hbr.org/1995/03/who-rules-the-worlds-financial-markets
Harvard Business Review,. (2000). The Dubious Logic of Global Megamergers. Retrieved 1 February 2016, from https://hbr.org/2000/07/the-dubious-logic-of-global-megamergers
