In this paper, we are going to be looking at different issues impacting international finance. This will be accomplished by focusing on the article Conflict on a Trading Floor and examining the role of the IMF in the global financial system. Once this occurs, is when we can see the challenges that will have an effect on international banking and the decisions that are made.
Conflict a Trading Floor
What are the stakes for the protagonist in "Conflict on a Trading Floor?" What options are available?
The four different options that are available for First America include: restructuring the deal, allowing the transaction to proceed, reporting the various discrepancies to upper management and letting Poseidon executives know about the conflict. ("Conflict on a Trading Floor," 2006)
The four stakes include: the relationship with the client, possible issues with ethical violations, regulatory challenges and the image of the firm over the long-term. The combination of these different elements is important, because they are showing the choices and outcomes from these actions. "Conflict on a Trading Floor," 2006)
Which would you choose?
The best option is to restructure the deal. The reason why is because of the unusually high fees that are being charged. This will hurt the relationship between the bank and Poseidon. Once this happens, is when the firm will be unable to do similar kinds of transactions in the future. Therefore, executives need to lower the fees for the transaction. This will improve the image of the company and it will provide the customer with the greatest long-term benefits. "Conflict on a Trading Floor," 2006)
The International Monetary Fund
Inception
The IMF's was founded shortly after the end of World War II. The basic idea was to provide nations with an institution that will offer stability through: opinions, assistance and strategies. This is in response to the challenges facing the global financial system and it's after effects following the Great Depression. As a result, the IMF's central goal is to ensure that this kind of situation does not occur in the future. ("What We Do," 2012)
Evaluation
Over the course of time, the role of the IMF has been continually evolving. This is because of new challenges facing the global financial system, have meant that their roles and responsibilities changed. This caused the IMF to become directly involved in providing assistance to countries and integrating their economy. Over the course of time, this will help to improve the standard of living and directly fight poverty. This is different from the original goals which were to: provide currency stabilization, loans and insights on global economic trends. ("What We Do," 2012)
Purpose
The purpose of the IMF is to serve as an institution that will provide direct assistance to nations during times of crisis. The way that this occurs is to offer short-term lending and assistance to nations in exchange for them following more liberalized standards. At the same time, they will offer direct advice in setting up their economy to see more stable economic growth. Once this takes place, is when these policies will help the nation to: reduce poverty and improve the standard of living. This is the point that a particular country will play an important role in helping to address specific needs inside the financial system. ("What We Do," 2012)
Responsibilities
The responsibilities of the IMF include: providing policy advice to governments, research statistic / vital information, loans / concession loans and technical assistance in managing local economies. These areas are important, because they are helping countries to directly address the challenges they are facing. ("What We Do," 2012)
Has the IMF met their objectives?
In the long-term, the IMF has fulfilled their original responsibilities. This meant that they would provide information about: possible trends, loans and support for currency reserve strategies. However, over the course of time, the IMF is playing a major role in supporting the global financial system. This is because of the previous successes of this program in showing how it can help to avoid a number of economic difficulties. (Schuerkens, 2008, pp. 48 -- 74)
At the same time, it is providing direct assistance to government officials in understanding how to effectively manage the economy. This helps to prevent any kind of future currency or debt crisis. Over the course of time, this is allowing these countries to engage in polices that will reduce poverty, promote long-term stability and improve the standard of living. This is when the nation can begin to address the root causes of the problems. (Schuerkens, 2008, pp. 48 -- 74)
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