Global Financing: Minimizing Risk in Term Paper

Open, View, and/or
Download this Document

Total Length: 1115 words ( 4 double-spaced pages)

Total Sources: 4

Page 1 of 4

Policies need be established that dictate how currency is used (Homaifar, 2003).

Trends in international banking suggests that within Europe while the euro may still be the standard currency used, often throughout the world and in international banks generally, much of currency is denominated in the form of dollars (Bertuch-Samuels & Ramlogan, 2007; Homaifar, 2003). The United States dollar has represented the gold standard among international financial institutions because the U.S. has relatively little exchange rate fluctuation, which lowers the potential risk within the international financial marketplace. To gain operational independence and affirm prices will remain stable, banks want to ensure the currency they use is issued in a country that is stable and holds prestige (Homaifar, 2003). This can easily be assessed by evaluating a country's financial systems, determining whether the banking systems are strong and offer policies and provisions for conducting business using foreign currency as well as domestic currency (Homaifar, 2003;Lim, 2006). The more standard and stable a currency, the more likely global financial institutions are to relinquish any concerns about market barriers so that capital can move more freely between countries and organizations conducting business (Lim, 2006).

Conclusions & Commentary

Financial institutions operating internationally face risk in many forms, including the risk of interest rate increases or foreign exchange rate volatility when working with various currencies (Homaifar, 2003). Multinational banks however, can minimize the risks associated with global financing by evaluating the cost-benefit of doing business with organizations and using various instruments, and analyzing alternate hedging vehicles for managing operations.

Stuck Writing Your "Global Financing: Minimizing Risk In" Term Paper?

View All Our Example Global Financing: Minimizing Risk in Term Paper

Have A Custom Example Essay Written



Blount (1998) suggests that reductions in risks associated with global financing will stem from cooperative efforts between banks and political leaders. Such efforts should involve "defining uniform codes for security and financing issues" and "braiding exchange trading and bank settlement processes" in a manner that creates "multi-currency accounting" and financing systems (Blount, 1998: 38). While on paper this concept seems simple, it is often difficult to commingle varying political and economic interests between companies to create stable bank financing and exchange trading policies to which every country will agree to. At most global financial institutions can hedge risks by looking for and working with countries that demonstrate stability and an active interest in cooperating with other countries to create more fluid "global capital markets" (Blount, 1998: 38).

Risk management initiatives should remain the primary focus of world banks interested in financing and providing operational efficiency for customers the institution works with. Network structures according to Blount (1998), may be the simplest and most practical way global financing can occur, thus world banks including those working with the euro should consider working together inter-dependently to create solid financial policy and practices that will help reduce volatility in the marketplace while promoting economic profitability for all countries involved in trade and international business and finance......

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Global Financing Minimizing Risk In" (2007, May 11) Retrieved May 15, 2025, from
https://www.aceyourpaper.com/essays/global-financing-minimizing-risk-37775

Latest MLA Format (8th edition)

Copy Reference
"Global Financing Minimizing Risk In" 11 May 2007. Web.15 May. 2025. <
https://www.aceyourpaper.com/essays/global-financing-minimizing-risk-37775>

Latest Chicago Format (16th edition)

Copy Reference
"Global Financing Minimizing Risk In", 11 May 2007, Accessed.15 May. 2025,
https://www.aceyourpaper.com/essays/global-financing-minimizing-risk-37775
   

Open, View, and/or
Download this Document
order custom essay example