The Influence Of The Financial Globalization Onto The Financial Safety Of Developing Countries

Since the eighties and nineties of the 20th century, the globalization of financial had been more obvious day by day. Nearly all the open economies have been involved into the globalization. I say, the financial globalization is the fruit of the economic integration. As economies benefit from financial globalization, they have also been intensively exposed to great risks. Several financial crises broke out in emerging markets during the past decades. As a sensitive core part of the modern economy, finance has a great influence to the community. If the financial situation in a nation is out of order, the stability of the society with its economy will be influenced as well, and which will further hold back its financial reform and economic development. Financial safety is not only the issue of its own business, it also concerns the interests of the whole nation in a strategic way. The regional bankrupts and financial crisis, as the results of financial globalization, had heavily threatened the financial stability and the economic improvement. The financial safety was, therefore, put forward as an agenda of the national security issue.Financial globalization has cleared away the obstacle in the way that the capital flows freely among countries to a great extent and has accelerated the liberalization of capital circulation. Those must increase the systemic risk of one country's domestic financial system and the whole international finance system. The foreign capitals which developing countries absorbed, especially short-term funds have mostly flowed into the finance or real estate departments. The disconnecting trend of fictitious economy and material object economy has been strengthened. The fund in stock market expanded fast. Thus there was more possibility for the bubble economy not only to be produced but also to be pricked.Financial globalization brings the keen competition between foreign financial institutions and local ones in developing countries. A large amount of international capital flowed in and international financing became more convenient. All those made financial service trades, the current account of BOP and regulation of BOP face the unprecedented challenge. The developing countries carried on the opening of the capital items actively. But the frequent flow of the international capital had caused the violent fluctuations of exchange rate and the foreign exchange market. After having analyzed the two extensive financial crises in Southeast Asia and Mexico, we found that the financial globalization process buries more seed of the crisis in every aspect of finance and economy of developing countries. So I say, it was an external reason in the breaking out of the crises. And after the crises broke out, they had made much harms to finance and economy of the developing countries and their neighboring countries. Now under the financial globalization background, in order to promote their ability to safeguard local finance safety, developing countries should make many omni-directional measures which are favorable to their national finance safety, according to each national condition. So they could conscientiously safeguard the national finance safety and keep economy sustaining, healthy and stable development.