The globalisation of finance and its implications for financial stability: an overview of the issues

This article provides a general overview of the impact of financial globalisation on financial stability, with a view to identify the sources of strength and the potential vulnerabilities. Attention is focused on the benefits of and risks for financial stability that are associated with changes in financial markets, the globalisation of the banking system and the role played by other important players in the global financial system, such as pension funds, mutual funds, insurance companies and hedge funds. The risks to financial stability that arise from the regulatory regime are also examined.