While global integration through economies of scale and harmonization of consumer preferences or global rules and regulations such as those of the World Trade Organization may reduce complexity, the fragmentation of supply chains, proliferation of rules, and growth in the number of participants and governments overwhelm the potential for simplification.
Challenges and Drawbacks of Financial PartnershipsSincethe financial services industry in wealthy nations and the United States has been experiencing a rapid geographic expansion; customers previously served by local financial institutions are now targeted at a global level.
Downward pressure on prices, especially outside Tier 1 citiesis making it increasingly difficult to induce families to invest an even larger share of their wealth in housing.
Over the next two years, the biggest risks to the global economy lie exactly in those areas where investors believe recent patterns are unlikely to change. This would of course, be good overall for the global economy, but might greatly strain regions and groups that fall behind.
Let's take a look at some of the regulatory history that contributed to changes in the financial services landscape and what this means for the new landscape investors now need to traverse. Economic development and the integration of economies amplify this complexity by raising the volume of traffic that flows across these many and diverse connections and by adding new nodes—cities, industrial zones, ports, computer network or logistics hubs, power stations, labs, conferences, and journals.
By Brian Beers Updated Aug 4, When an organization decides to engage in international financing activities, it takes on additional risk along with the opportunities.
These risks may sometimes make it difficult to maintain constant and reliable revenue. Although each of the new financial activities, such as derivative instruments or currency swaps, may have been designed to distribute and thereby reduce risk, no one actor in the financial crisis had a clear view of their systemic implications.
But it is the systemic risks that arise from the growing entanglement of firms, economies, and systems that are escalating most rapidly.