Economic essay on Inernational monetary fund report

Economic on Inernational monetary fund report - Essay Example In between 2001 to 2005, The international portfolio assets of United States grew from $2.3 trillion to $ 4.6 trillion. Finding also revealed a decline in home bias and increased investments into alternative vehicles such as hedge funds. It also revealed official sector growth in asset management by Emerging Market official sector and sovereign wealth funds, at the end of year 2005, managing assets predicted to have more than $ 6 trillion. Individual banks, hedge funds, insurance and pension funds face unreliable constraints that affect their investment allocation as they have different objectives. As openness to foreign intermediaries has been growing worldwide, emergence of conglomerates combining banking, securities, assets management etc in one organization have also been made possible by deregulation. Mature market economies and emerging have been affected by institutional globalization. The upward trend has been observed since 1995 in the ratio between global cross-border capital flow and world GDP. Oil producer countries have become large investors in financial instruments, such as bonds and equities. Sovereign wealth funds make such investments directly or by placement of funds with external investment managers. Market estimates reveal that these funds manage over $ 1.4 trillion. Consolidation of the industry has been directed by Merger and Acquisition (M & A); ongoing securitization and the expansion of derivatives markets has allowed institutions to transfer within and across the borders. Institutional globalization affects both, emerging and mature markets economics because some emerging market – based financial institutions operate on international level. We shall be discussing