Financial Innovations in International Financial Markets

The central theme of this paper is that financial innovation has become a major force effecting the United States and other developed economies. The common features of the process include product innovation, securitization, liberalization of domestic financial market practices, globalization of markets, and increased competition among financial institutions. The paper offers a review of the product and process changes that have occurred in international financial markets, an analysis of the factors leading to these changes, and an examination of the implications for both financial market participants and macroeconomic policy makers.