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B207 Block 2: Finance in a global context - Coggle Diagram
B207 Block 2: Finance in a global context
Financial regulation and reporting
International financial reporting standards (IFRS)
The International Accounting Standards Board (IASB framework)
transparency
accountability
efficiency
The contingent model of accounting change
International financial institutions
The International Monetary Fund
Lends money to countries who cannot borrow elsewhere
Ensures stability of the international monetary system
The World Bank
Long term goals
Eradicate extreme poverty
Promote shared prosperity
Balance of payments
The current account
registers payments for imports and exports
registers incomes and transfers of money to and from abroad made
The capital account
records financial inflows
covers claims on or liabilities to non-residents
Financial assets
direct investments
portfolio investments
reserve assets
currencies
commodities
financial capital held by monetary authorities
The financial account
records all transfers of capital to and from abroad
Foreign direct investments
Investments made by other companies in other countries
The concept of multinationals
Companies that have operations in at least two different countries
can choose where to keep their cash
can choose the currency in which to store that cash
can also choose where their expenses
Global imbalances
Countries that have a current account surplus overall export more than they import
Having more surplus countries may oblige the deficit countries to borrow and/or sell assets
2008/09 Global Financial Crisis
Portfolio investments
financial assets are bought and sold
Tax
'Paying Taxes' project
records the taxes and mandatory contributions that a small and medium-size company must pay
Taxes and contributions measured
Profit
Social contributions and labour taxes
Property taxes
Property transfer taxes
Dividend tax
Capital gains tax
Financial transactions tax
Waste collection taxes
Vehicle and road taxes
Tax avoidance
Tax evasion
Transfer pricing
Transfer mispricing
The arm’s-length principle
Unitary taxation with profit apportionment
Base Erosion and Profit Shifting
The foreign exchange market
Exchange rate fluctuations in foreign markets
Increase in currency value
Appreciates
Decrease in currency value
Depreciates