The World Financial System: a Long Way to Multipolarity

Maksim V. Petrov ()
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Maksim V. Petrov: MGIMO University, Moscow 119454, Russia

Finansovyj žhurnal — Financial Journal, 2018, issue 2, 47-58

Abstract: The article analyzes the current positions of the world’s top 10 economic powers in the world financial system. To assess their weight in global finance, a group of interrelated criteria was used: the size of the domestic financial market, the participation in the international capital flows, the level of internationalization of currencies, the status of international financial centers located in countries and the role of their national banking groups in the world. The article shows that in the period following the 2008 financial crisis, major developing countries (India, Brazil, Russia and Indonesia) for various reasons failed to significantly increase their influence in the financial sphere. For all the above criteria, they are much inferior to the leading developed economies that continue to dominate in the world finance. Only China can compete with them, consistently increasing financial strength and presence in global capital markets. The main factor that does not allow China to finally establish itself as one of the main world financial centers is weak internationalization of the renminbi. The measures planned by Chinese authorities to liberalize capital flows will help to expand the use of the yuan abroad and in further to increase China’s cross-border cash flows. The logical result of these processes will be the formation of a tripolar world financial system, in which the existing poles of power in the face of the USA and the Eurozone will be joined by China.

Keywords: world financial system; multipolarity; international capital movement; internationalization of currencies; international financial center; transnational banks (search for similar items in EconPapers)
JEL-codes: E42 F33 F37 G15 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:fru:finjrn:180204:p:47-58

DOI: 10.31107/2075-1990-2018-2-47-58

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