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The globalization of world capital markets provides nations, along with a number of businesses, including banking, central banking, & investment banking with a large degree of liquidity. This liquidity encourages world wide investments as major global players have confidence that there will be an active market for buying and selling.

The linkage provided by this globalization, however, can be problematic in a severe crisis. When liquidity shrinks, and credit tightens, this can cause global disruptions in the in bond and equity markets.

In the past where some nations had closed economies or set their currency's value by Fiat, the benefits along with the hazards were not felt entirely on a global basis. The penalty for this was the inability of those particular nations to entertain growth from capital from abroad.

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11y ago

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