1. Governing Global Finance: Financial derivatives, liberal states and transformative capacity
- Author:
- William D. Coleman
- Publication Date:
- 10-2001
- Content Type:
- Working Paper
- Institution:
- Institute on Globalization and the Human Condition, McMaster University
- Abstract:
- Global finance is simultaneously one of the most globalized and one of the most esoteric sectors in the world economy. Within global finance, perhaps no activity is more esoteric and more difficult to understand than the buying and selling of derivatives. Their names are familiar perhaps – futures, options, forwards, swaps – but their nature is obscure. Simply put, derivatives are financial instruments that are used to hedge risk. If a Canadian corporation knows that it will want to buy 50 million US dollars on foreign exchange markets in three months time, it can arrange a fixed price for that purchase using a financial contract called a derivative. In doing so, it lowers the risk of the price of the currency changing drastically before it purchases the amounts it needs.
- Topic:
- Globalization, Government, International Trade and Finance, and Markets
- Political Geography:
- United States and Canada