Understanding the Role and Impact of Green Bonds on the Financial Sector

Socially responsible investment has become an important role of financial services in the world. One of the latest investments that are available in the market is called “green bonds”, its popularity has taken off the recent years. A green bond is a bond specifically earmarked to be used for environmental and climate activities, meaning green bonds are used to fund projects with clear environmental benefits. To elaborate, green bonds are intended to encourage climate-friendly projects that aimed at pollution control, sustainable agriculture and wastewater management system, clean transportation, climate change adaptation, etc. Green bond market is open to different types of issuers such as government bodies, corporates, and financial institutions.… Read the rest

Gold Backed Currency System

If the monetary authority holds sufficient gold to convert all circulating money, then this is  known as a 100% reserve gold standard, or a full gold standard. Some believe there is no  other form of gold standard, since on any “partial” gold standard the value of circulating  representative paper in a free economy will always reflect the faith that the market has in that  note being redeemable for gold. Others, such as some modern advocates of supply-side  economics contest that so long as gold is the accepted unit of account then it is a true gold  standard.  In an internal gold-standard system, gold coins circulate as legal tender or paper money is  freely convertible into gold at a fixed price.… Read the rest

The Benefits of a Single Currency System – Euro

The euro is the result of the most significant monetary reform in Europe since the Roman  Empire. Although the euro can be seen simply as a mechanism for perfecting the Single  European Market, facilitating free trade among the members of the Euro-zone, it is also  regarded by its founders as a key part of the project of European political integration.

The euro is administered by the European System of Central Banks (ESCB), composed of the  European Central Bank (ECB) and the Euro-zone central banks operating in member states.  The ECB (headquartered in Frankfurt am Main, Germany) has sole authority to set monetary  policy; the other members of the ESCB participate in the printing, minting and distribution of  notes and coins, and the operation of the Euro-zone payment system.… Read the rest

Depositary Receipts – Definition, History and Types

A Depositary Receipt (DR) is a type of negotiable (transferable) financial security traded on a local stock exchange but represents a security, usually in the form of equity, issued by a foreign, publicly-listed company. The Depositary Receipt, which is a physical certificate, allows investors to hold shares in equity of other countries. One of the most common types of Depository Receipts is the American depository receipt (ADR), which has been offering companies, investors and traders global investment opportunities since the 1920s.

Since then, Depository Receipts have spread to other parts of the globe in the form of global depository receipts (GDRs).… Read the rest

International Financial Markets

International financial markets provide links connecting the financial markets of each country and independent markets external to the authority of any one country. The heart of the international financial market is being governed by the currency market where the foreign currency is denominated by the international trade and investment. Hence the purchase of goods and services is preceded by the purchase of currency.

The following are the reasons given for the enormous growth in the trading of foreign currency:

  • Deregulation of international capital flows – Without the major government restrictions, itis extremely simple to move the currencies and capital around the globe.
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Significance of Balance of Payments (BoP) Data

Balance of payment records all economic transactions between a county and the rest of the countries around the world annually. The balance of payment is made up of two distinguished components respectively the current account, capital and financial accounts. Transactions such as exports and imports of goods and services, income and transfers are recorded in the current account. On the other hand transactions relating to portfolio and foreign direct investments are recorded on the capital and financial accounts. Balance of payment is an important indicator of the health of any country’s business as it reflects its international trade and investment performance.… Read the rest