In recent years, there has been a significant increase in the scale of the global financial market. If earlier the world financial market was traditionally considered to be part of the structure of the world loan capital market, now the border between them is becoming less clear and strict, since trade in financial and derivative financial instruments cannot be fully summed up under the category of loan capital.
Financial instruments are understood as any document that is specially written in accordance with regulatory requirements (or as an oral and subsequently confirmed obligation by various telecommunications means) that provides their owner with certain property rights. Foreign economists divide the world financial market into money markets and capital markets, based on the criterion of urgency of the instruments of these markets. This allows us to talk about the world financial market as a set of national and world markets that provide direction, accumulation and redistribution of monetary capital between market entities through banking and other financial institutions in order to reproduce and achieve a normal ratio between supply and demand for capital. From an economic point of view, the global financial market is a system of relations and a mechanism for collecting and redistributing credit resources on a competitive basis between countries, regions, industries, and economic agents.
The global financial market accumulates and redistributes loan capital, which manifests itself in the form of the world money market and the world capital market. Capital is a set of economic relations about self-increasing value. Self-increasing value is understood as value, which, as a result of the use of hired labor, brings surplus value. The money market is a market in which short-term financing operations are carried out. On the basis of the export and import of capital, an international capital market emerges. It is a system of economic relations that ensure the accumulation and redistribution of capital between countries. If in the world money market the determining factor is the high liquidity of its instruments, then in the world capital market – the credit risk of the borrower, interest rate risk, political risk, etc.
The money market is a part of the global financial market in which short-term financing operations are carried out (from 1 to 7 days to 3 months), where the loan capital functions as an international means of payment and purchasing. It is mainly represented by the interbank market, in which banks place temporarily free cash.
The credit market is a market where loan capital acts as a self-increasing value and is divided into the market of short-, medium- and long-term loans. The short-term loan market is mainly the interbank market.
The medium-term loan market appeared in the late 60s. as a result of an imbalance in the loan market: with a swollen mass of short-term funds, there were not enough long-term credit resources. In these conditions, a mechanism was developed for transforming short-term funds into long-term ones: credit activities based on passive operations with certificates (extension of their validity) and active operations with revolving loans.
The long-term loan market usually exists in the form of a bond market. With a certain degree of conventionality, it can be represented as a combination of two sectors: the foreign bond market and the Eurobond market. A foreign bond is essentially a type of national bond. Their specificity is that the issuer and the investor are located in different countries. There are two main ways to issue foreign bonds. First – bonds are issued in country A in its national currency and sold in countries B, C, D, etc. The second – country A allows you to open a foreign bond market for non-residents issued in the currency of this country. Most of their issues are practically carried out in the national markets of four countries: the USA, Germany, Switzerland, Japan.
One of the features of the modern global financial market is the rapid growth of derivatives markets or the global derivatives market, which makes it possible to supplement the structure of the global financial market. The financial derivatives market is a set of economic relations regarding the trading of financial risk instruments, the prices of which are tied to another financial or real asset. The main distinguishing feature of the global financial market of derivatives is, on the one hand, its relative isolation from the world money market and the world capital market, and, on the other hand, the interconnection and interdependence of the instruments of the world derivatives market with the instruments of the world money market and the world capital market.