International Investment Law
1A.
Functions of the Financial system:
Providing payments systems – payments for goods or services, mortgage,
contactless, wages.
Providing deposit taking facilities and a store of value system – bank account,
storage and value system, deposit insurance up to 80,000
Lending to households, businesses, and governments – a bank is mostly lending,
intermediaries.
Helping households and businesses to manage their risks and financial needs over
time.
Negative externalities – Unemployment
Do not include any externalities that have occurred from 19/1/23
Basil banking commission
ICB Independent Commission for banking
How does a financial market differ from a fish market?
Fish market
Product is sold for consumption
Value depends on current characteristics
Transactions allocate goods to those who value them most
Financial market
Product is right to receive stream of future payments
Value depends on future events
Markets are largely secondary: transactions do not directly affect resource allocation
(managers make investment decisions)
What is a financial market? It is a market in which people can trade
The benefits are:
Help’s coordination between market participants
Lowers transaction costs such as:
o Collection of information
o Agency costs
Improves market efficiency
Facilitates the raising of capital and transfer of liquidity
Maximisation of gains made from trading
Some examples of financial markets:
Public equity (stocks) – stock market, FTSE, NASDAQ
Public debt (bonds) – investment in public infrastructure
Exchange traded derivatives – 57 trillion - a combination of various types of debt,
collaterised debt collection
OTC Derivatives – $639 trillion - most commonly traded derivative product, 20
percent deposit, 80% motgage on a house most common offer.
1A.
Functions of the Financial system:
Providing payments systems – payments for goods or services, mortgage,
contactless, wages.
Providing deposit taking facilities and a store of value system – bank account,
storage and value system, deposit insurance up to 80,000
Lending to households, businesses, and governments – a bank is mostly lending,
intermediaries.
Helping households and businesses to manage their risks and financial needs over
time.
Negative externalities – Unemployment
Do not include any externalities that have occurred from 19/1/23
Basil banking commission
ICB Independent Commission for banking
How does a financial market differ from a fish market?
Fish market
Product is sold for consumption
Value depends on current characteristics
Transactions allocate goods to those who value them most
Financial market
Product is right to receive stream of future payments
Value depends on future events
Markets are largely secondary: transactions do not directly affect resource allocation
(managers make investment decisions)
What is a financial market? It is a market in which people can trade
The benefits are:
Help’s coordination between market participants
Lowers transaction costs such as:
o Collection of information
o Agency costs
Improves market efficiency
Facilitates the raising of capital and transfer of liquidity
Maximisation of gains made from trading
Some examples of financial markets:
Public equity (stocks) – stock market, FTSE, NASDAQ
Public debt (bonds) – investment in public infrastructure
Exchange traded derivatives – 57 trillion - a combination of various types of debt,
collaterised debt collection
OTC Derivatives – $639 trillion - most commonly traded derivative product, 20
percent deposit, 80% motgage on a house most common offer.
