Latest developments and trends that are shaping international finance

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The state of international finance has continuously achieved monumental and dramatic changes over the years. While there are several aspects that may have contributed to its transformation, there’s no denying that the main drivers of these changes come from three major factors: technology, geopolitical climate, and economic policies by the world’s leading decision-makers.

Here are the latest updates from around the world that are slowly transforming international finance.

  1. China’s global trading conquest.

As the second largest economy in the world, China has the power to stir dramatic changes on a global scale. The economic giant recently reached out and forged partnerships with other countries. Additionally, its famed “One Belt One Road” initiative is set to create a modern Silk Road, providing a massive infrastructure through efficient land and sea access among China, Russia, Europe, and other neighboring countries.

  1. Financial Technology in Banking

Technology has touched almost every aspect of the modern world, and the Finance Industry is no exception. Innovations such as blockchain technology, data analytics, artificial intelligence (AI) as well as cloud computing are slowly transforming modern banking and investing. In offshore investment centers like Bermuda, firms are increasingly capitalizing on digital platforms. LOM Financial’s OPUS system, for example, offers self-directed online trading access on all major global markets and exchanges.

  1. Japan’s rising ETFs.

Last year was a great one for the stock market, and it’s not just participants from the West that enjoyed its benefits of the soaring financial markets. Japan, for instance, experienced a surge in Exchange Traded Funds. Experts suggest that the reelection of Shinzo Abe as the country’s prime minister caught the attention of investors, benefiting two of Japan’s leading ETFs: iShares MSCI Japan ETF and WisdomTree Japan Hedged Equity Fund.

The Forex market: How big and liquid is it exactly?

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The Foreign Exchange Market (Forex) is a 24-hour over-the-counter market for trading of currencies. Since it has a global scope and is decentralized type of market, transactions take place everywhere in the world with no central and physical location unlike other financial markets like the London Stock Exchange (LSE) and the New York Stock Exchange (NSE). In addition, since there is no clearinghouse or a central exchange, dealers and brokers conduct negotiations directly with one another.

The Forex market is the largest financial market in the world, and not to mention it’s also the most popular among individual investors, central banks, commercial banks, and financial institutions. Since it’s an extremely liquid market, it allows huge trading volumes to take place without greatly affecting price or price action. However, depending on the time of the day and the currency pair, its relative liquidity could influence the market depth.

The Forex market is composed of traders representing hundreds of international banks, central banks, governments, institutional investors, and millions of private traders trading currencies on a daily basis. This huge volume of participants contributes to the market’s turnover rate and based on recent data, it continues to grow.   According to the Bank for International Settlements, the daily trading was $5.1 trillion (as of April 2016). In 2010, it was the average daily turnover was just estimated to be $3.9 trillion.

There are different currencies being traded in the forex market but the ones from highly industrialized countries with the most active economies lead the rank. As of 2017 data, the U.S. dollar against other currency remains the most traded in the market, followed by the Euro.  Other highly traded currencies include the Japanese yen and Chinese yuan.

For more insights into the forex market—and investing as a whole—read up LOM Financial’s posts on their Facebook page.