Geography Reference
In-Depth Information
to locate in London. Apart from the financial services inflows of foreign
investment from other European countries, by far the most important
inward flows were from Japanese banks.
As well as the ending of US capital controls in 1974, the flood of
petrodollars into London following the OPEC crisis provided further
impetus towards global financial integration, and away from the protected
domestic market characteristics of the City and other European financial
centres. By the 1980s these challenges to the traditional organization of the
financial markets were also accompanied by new regulatory challenges for
the supervisory authorities, as the nature of competition in these globaliz-
ing markets was rapidly changing. Moreover, these challenges arose not
just from the changes in market structure, but also from changes in the
financial products themselves. One of the key aspects in that respect was
that the boundary between securities markets and banking was becom-
ing increasingly blurred. As such, policymakers in international financial
centres needed to modernize and democratize banking regulation and
supervision, so as to desegregate credit and deposit markets, to break
up domestic financial monopolies, and to modernize investor protection
systems (Coleman 1996). However, the restructuring resulted in even
greater unanticipated inflows of short-term foreign capital (Miles 1992),
which rendered monetary aggregates very difficult to monitor. Existing
approaches to monetary policy became largely impossible to implement,
forcing governments to focus primarily on the relatively blunt instrument
of interest rate adjustments as the primary means of controlling inflation.
6.5
GLOBAL TRANSFORMATIONS SINCE THE
1990s
During the 1980s, all areas of North American, European and Australasian
commerce changed fundamentally from earlier decades in terms of their
modes of operation, the approaches to management, the nature of labour
relations, the control of production and distributions systems, and the
methods and approaches to market regulation. In all Western commercial
sectors, the newly-emerging organizational, managerial, regulatory and
supervisory challenges had been driven by the rapid rise of overseas com-
petition, in particular coming from the Asian region.
Yet, much of the pressure for these changes had been accelerated and
exacerbated by the shift to the new technological paradigm of informa-
tion and communications technologies (ICTs). As we have already seen in
Chapters 4 and 5, this new technological paradigm generated an enormous
increase in both the complexity and speed of knowledge and information
