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Finance in a global context, Global imbalances # #, Exchange rate to…
Finance in a global context
Economic & financial flows (session 5)
IMF
Stability
Fiscal policy
Economic stability
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#
Structural reforms
Monetary policy
as of 2016, 189 members
Migrant crisis
The World Bank
End poverty
Improve social & economic conditions
Balance of payments
Capital account
record all capital transferred abroad
Financial account
records inflow
Current account
payments import & export
Deficits
Surpluses
FDI
e.g. MNCs
Invest / build
Selling in foreign market
MNCs
Tax avoidance
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Where?
Currency
Profit
Cash
Easier to do business in some countries
Shifting profit
Concentrated power
Reduced competition
Innovative products
Base erosion & profit shifting (BEPS)
Tax & exchange rates (session 6)
Transfer pricing
Arm's length
related companies
Tax avoidance
acceptable trading
Digital economy
Complicated taxation
Exchange rate
Fluctuations problem for SMEs
Sterling down
Exports up
Imports down
Inflation up
McBurger index
Value of currency
PPP
Supply & demand of currency
PESTLE / Problems
Difficult to plan
Costs
International financial reporting (session 7)
IFRS
Accounting
International standards
accountability
efficiency
High quality
Why?
seeking investors / lenders
comparability
Most countries but not all
transparency
Jurisdictions
different rules / different objectives
Contingent model
Side effects of new regulations
Regulation
Information for stakeholders
Info for economy
Basis for tax
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#
Roman law
Common law
Global imbalances
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#
Reduce debt quickly
Risk slump in demand
Reduce debt slowly
Risk in further shocks
Exchange rate to balance
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Government intervention
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