February 15, 2010 by akhilendra
Changing global financial system
World is witnessing a change in global financial system. Finance chiefs are preparing for the meet of world leaders in G20 summit, who are fighting against world’s worst financial crisis in last 80 years. In last few months, there has been unstoppable selling of stocks in various share markets. Central banks have launched a range of initiatives to hold the fall in markets which has resulted in recession in various economies across the globe. It has really shattered the confidence of investors. People have lost big portion of their hard earned money. People are losing their jobs, delayed hiring, projects getting postponed & many more things are happening which are against economical growth. It’s been a series of months of downfall. Shares of Indian firms listed in united states have lost more than 3 billions. Everyone is desperate to know the bottom, central banks heads & policy makers have been scratching their head to have some clue about “how to recover from here?”
Last few months has forced policy makers to rethink their strategies & come up with new plans to tackle this financial turmoil. Central banks have started cutting down interest rates to infuse liquidity in market. Markets ended on a positive note with power, oil, telecom, technology & capital goods stock recovering. Experts believe that market may not fall further. Positive global moves are helping the market in recovering. The sensex surged 230.07 points to close at 9964.29 & Nifty closed at 2973 with a gain of 80.35 points, as of week ended on nov 07,2008. But attempts have been limited to central banks, various governments have not taken many initiatives as of now, they need to cut taxes & deliver fiscal stimulus. Governments should come forward along with central banks to this gigantic issue which is haunting our life. Finance ministers and central bank chiefs from the Group of 20 industrial and developing nations are going to meet on November 14-15 in Washington. The finance chiefs will meet in the U.S. capital on Thursday, following up on weekend talks in Brazil. Current financial crisis is probably going to be the hot topic of this meet.
Central banks can only provide monetary stimulus, for fiscal stimulus governments should come forward. In G20 summit, they might look for actual cause, building reforms & making teams of experts to tackle issue. The move of rate cut has helped market to recover a bit but it is a mere breather, there can’t be a permanent change in market situation unless governments do something to push economy. Fiscal initiatives should be taken to put growth back on track. Long term investors says, it is the best time for buying as most of the shares are under-evaluated but unless confidence among investors comes back, no one pull back the markets to its old highs. Global economy is changing & it is very important for various governments to understand this change & respond in a appropriate way.
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