This paper will attempt to explain the roles of financial institutions in the global economy while also looking into the future of the financial services industry over the next decade and speculating as to how the industry is likely to change. Finally, I will examine how these changes might impact the stakeholder relationships my organization has with financial institutions.
To understand the role financial institutions play in the global economy it is important to first understand the nature of the global economy and the term globalization.
Globalization is the process by which countries' economies become increasingly interwoven. This happens with the increased flow of goods (trade), foreign direct investment, money (finance), and/or people (migration). While globalization is not new, the speed, depth, and scope of the changes (aided by technology), is. Also new to the mix is the enormous power of International Financial Institutions (IFIs) and global trade groups such as the World Trade Organization (WTO) to set the rules of the global economy. (Holmes 2005)
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