There are many theories focused on explanations of financial crises. Different authors give their views on what caused the financial crisis globally, but the main view is that global relations are those, which define the scope of the crisis. Financial crises reveal a certain gap between financial and real sectors. This rift has three causes.
- First, the increase in money supply as a result of increasing mutual reversibility of national currencies and the control of the central banks control, which is often too soft.
- Second, the pressure increases due to the dramatic reduction in transaction costs, leading in turn to a contraction of space-time dimensions of financial markets and allowing the basis of most modern information and communication technologies to trade in all markets where it in real time. This process is further accelerated by financial innovation, which are the product of increased competition.
- Third, weakening the effectiveness of control by supervising financial institutions. This is a consequence both of their limited abilities to realize their goals, and the shortage of foreign exchange reserves of central banks, limiting opportunities to counter speculative capital movements.
All this raises the question of the crisis is not only internationally, but also focused on the impact of the crisis on individual economies.
US Money Reserve data and market researchers point to several sets of reasons relating to the financial crisis like increasing opacity of financial markets, which is caused by the intensive application of a wide range of new financial products that increase the daily volume of forex transactions, this volume equal to the capital of a large U.S. bank only a few decades now equals of the total capital of the first hundred banks.
Another reason is the significant reduction in the resources of the International Monetary Fund, appearing in turn consequence of contraction of the States of OPEC, which in turn is associated with increased foreign exchange receipts of these countries and rising oil prices.From a structural point of view, international currency financial organizations dramatically reduced the volume of outstanding loans and gived $ 70 billion in 2003 to about 20 billion in July 2006 to tend to the International Monetary Fund has fewer resources to combat against the occurrence of financial crises and their distribution.
The last reason is the significant U.S. trade deficit. The latter is a reflection not only of the commercial assets of China, but also that of India and other countries in Southeast Asia, assets arising from the explosion of growth in these countries and in particular the growth of high-tech and high rate of value added exports to the U.S.. Therefore: dependence on the U.S. economy from external partners and diminishing resources of international Monetary Fund, determine the growth of this global crisis.
