Global Debt Crisis Essay
The most important aspect of globalization to the world’s economies is the robust growth of financial institutions and monetary sectors which is characterized by massive transactions of money across countries and huge development of foreign exchange markets. Going global to many companies around the world was viewed as a stepping stone to another new face until 2008. This was realistic since the population growth had slowed, incomes were flattened and the western markets were extremely competitive. Contrary, the developing nations boasted population growth, rising salaries, wages went down and an attractive environment for foreign investments as explained by Bouchet, (2014). This paper discusses the potential roles of firms, banks, central banks, national governments, the international monetary fund, the World Bank as the world recovers from the global financial crisis and finally the importance of national governments specifically the kingdom of Saudi Arabia in stimulating national growth of the economy.
Nevertheless, banks ought to follow the obligation of corporate social responsibility to enable them increase transparency and reduce complexities that can hinder economic growth Petersen & Wiegelmann, (2014). This needs to be internalized even in countries that are reluctant to take such measures. Since banks are the most important source of finance, bank intermediation will enable banks to widen their focus to include SMES and households so that they can diversify their revenue stream to them Al-Jasser, (2011). Central Banks Central banks have powerful instruments in place such as the monetary policies that can effectively respond and mitigate such situations as the crisis and any other extraordinary phenomenon to do with an economy. Central banks can use standardized and non-standardized monetary policy measures to raise and improve its credit rating and enhance the financing conditions in any given economy.
The national governments should furthermore issue guarantees to banks since it will help their specific countries boost their economy. For example, Balakrishnan (2008) explains that in Denmark, after government issued guarantee to banks, liquidation fund of up to Kr 35 billion which could take over the affected institutions as a result of debt crisis and to avoid losses to their depositors and creditors. In addition to its roles, the governments can target social infrastructures in the sectors of education, housing, health and agriculture to promote the welfare of its economy and more so crate employment opportunities to its citizens. Government policies will perform a vital role in achieving an attractive environment for investors. The International Monetary Fund The International Monetary Fund (IMF) can ensure efforts to improve cooperation and growth of economies around the world through providing loans and credit to emerging countries.
Through lending by the World Bank will help governments delay the use of funds that come with demands for reforms hence carry stigma to a given country. The bank can also help those countries that are vulnerable meet their goals of financing while it adjusts its policies to do with revenues and expenditure to the fiscal conditions as a result of the crisis. Independent Evaluation Group, (2012). The Role of the Kingdom of Saudi Arabia in Stimulating National Economic Growth The kingdom of Saudi Arabia has taken reforms which are geared towards stabilizing its state finances so that it creates a favorable environment for the government to start investing in its economy Torchia & Rashad, (2017). Furthermore Torchia and Rashad (2017) explain that the government has plans of convincing foreign investors that they can earn good returns because they have raised money with asset sales and encourage private public partnership which private firms can invest in.
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