With the unprecedented technological advancement and global political pressures in the second half of the 20th century came a change into how people invested their money. Where before the global capital system was a domain of government, running mainly on transfer payments, private institutions and individuals have slowly increased their participation in this market as globalization and trade become the rallying points in global development.
The Global Capital System
Initially the Global Capital System was an extension of the US financial framework, this mainly owing to its dominance of the world economy right after World War II. Capital flows came in the form of credits and grants under the Marshall Plan to rebuild the economies of Western Europe. Yet political pressures, economic development and regulatory practices of the period eventually lead to the development of the private sector giants, businesses and individuals that have slowly displaced the lead role of governments in the international financial markets.
The main difference between the international financial markets and a closed economy is the introduction of currency as an asset class by itself. Where in the latter your average portfolio manager has a choice between bonds, commodities, and equities as an investment venue now currencies of themselves do not merely facilitate a transaction but become a speculative instrument where profit is made from the fluctuation of exchange
