Question

What is the advantages and disadvantage of international money market?

Answer 1

Advantages of international money market are as followings

1. Interaction among the global economies lead to flow of more funds around the world. FII and FDI policies facilitate the interaction of money market around the world.
2. Faster movement of funds is another benefit of interaction among the money market. Now days one can easily transfer funds from one nation to other with ease. Also, one can easily convert the currencies from one form to another.
3. International money market has further facilitated the international trade. Borrowers and lenders can easily trade among different goods and service in any currencies. The convertibility of currencies has further improved the flow of goods and services.

Disadvantages of International money market are:

1. International money market has further enhanced the integration of financial markets around the world. This has also created the problem of too many offshore bank accounts which have become a heaven for tax savers and smugglers around the world.
2. Integration of money market has also lead to difficulty in monitoring. The same was seen in case of Brexit when Europe’s financial market got a setback.
3. It has been also observed that issues related to tax liability have also popped up. Double taxation on the part of many business firms has created disputes in taxes.