We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is the Global Financial System?

By Haven Esme
Updated: May 17, 2024
Views: 14,923
Share

Since the dawn of creation, people have engaged in financial transactions of some sort. Today, financial transactions often take place on an international level within the global financial system. This system allows markets to exchange information and financially impact each other around the clock. The technical definition for a global financial system, however, is a system composed of financial institutions and regulators that act on an international level. As globalization evolves, the system becomes more influential in many country’s economies.

There are several international institutions that play a prominent role in the global system. One of the most prominent institutions is the International Monetary Fund, which was created by the United Nations in 1944. The purpose of the institution was to build a framework for economic cooperation and ensure that the international monetary system remains stables. The Fund works by controlling and monitoring exchange rates and serving as a liaison for countries to enter into transactions with each other. The International Monetary Fund is credited for preventing crisis in the global financial system.

Another prominent player in the global system is the World Bank, whose main purpose is to provide loans to developing countries. The World Bank was created by the United Nations in an effort to eradicate poverty in poor countries. In addition to financial resources, the World Bank also lends technical expertise to help countries progress in areas of education, infrastructure, communications, and health.

The initial goal of the World Bank was to free the world of poverty. After many years in existence, the World Bank has undergone criticism for its inability to eliminate the massive poverty that still rages in many countries. The World Trade Organization also plays a crucial role in the global financial system. The organization was created to establish and enforce rules of trades between nations.

The global financial system is responsible for providing core economic functions. The system facilitates trades, provides a mechanism for the pooling of resources, manages financial risks, provides price information, and provides ways for countries to transfer economic resources across borders and among different industries with ease. The financial system is a complex system that functions and changes with the economic and political climate. Despite differences in cultural, political, and historical backgrounds, countries come and work together in the global system.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-is-the-global-financial-system.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.