2011-08-14
The Problem of Interconnectedness
How would we describe interconnectedness - a chain of banking institutions holding certain assets for the benefit of each other and for stability of a whole international financial system. This description was until recently most common for the banks in Western Europe and the US where financial markets determine on actions undertaken by the whole of the banking world and not single banks in isolation. However, this particular feature is now transferred to Latin America . The reason - the economic boom in Brazil, the advance of services offered in Argentina and the oil-rich Venezuela enter a new era of banking relations.
And while the banks in South America need to keep close to each other in order to ensure economic progress of their respectful countries, a problem arises - interconnectedness of the financial services market on the continent would lead to dependency of the region upon the actions by developed countries. Thus a probable financial crisis would not only affect the countries that until recently were the developed world economies but also the emerging markets after the Latin banks start fueling each other.
Now even the Diesel Kent providers would start following South American financial news. Financial experts from leading financial editions point out that interconnectedness is no longer avoidable - South America would soon be related with banking strings and connected with complex financial relationships. And when this finally happens we will have one more problem to worry about - the stability of their markets. Thus the market regions which can induce a financial crisis become three - the US, the EU and South America.
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