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Earlier this week, Fidelity National Information Services Inc. (FIS) announced their agreement to acquire fellow global payments company Worldpay in a deal valued at $35 billion in cash and stock. The combined company will become a one-stop shop to process online and in-store payments and manage multiple currency transactions. Management is hoping the combined larger company will be able to reach more customers in an increasingly online industry, while also recognizing around $400 million in cost synergies.

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The London Inter-bank Offered Rate (LIBOR) is an interest rate benchmark that is used to set the interest rate on hundreds of trillions of dollars in debt around the world. The LIBOR rates are set via a consensus mechanism whereby the world’s leading banks submit the interest rate at which they believe they could borrow funds from another bank. The LIBOR rate is set for seven different maturities, ranging from one week to one year, with the most commonly quoted rate being the three-month U.S. dollar rate, which is known as the “current LIBOR rate”.

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globalEDGE has added the 2018 Financial Secrecy Index to our growing list of indices in the global insights by country pages. Provided by the Tax Justice Network, the Financial Secrecy Index ranks jurisdictions according to their secrecy and level of offshore financing activities. The index was developed in collaboration with the world’s largest banks, law practices, and accounting firms that are intimately familiar with the secretive offshore financial structures of some of their clients.

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Stock markets all over the world did very well last year.  Many countries have seen their stock market indices hit record highs recently.  A stock market index is a tool used to measure a section of the stock market.  The most popular stock market indices measure some of the largest, most influential companies traded on the stock market.  Here are two links that explain how a price-weighted index and a market-value weighted index are calculated. The two most popular American stock market indices are the Dow Jones Industrial Average, which is a price-weighted index, and the S&P 500, which is a market-value weighted index. 

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With a population just over half a million and total land area of 1,000 square miles, Luxembourg is one of the smallest countries in the world. Despite their size, Luxembourg is a major player in the global financial industry. With $4 trillion in assets in custody of financial institutions, the landlocked Central European Grand Duchy is the second largest investment fund domicile in the world, behind only the United States. The financial industry in Luxembourg is responsible for over 35% of the Grand Duchy’s $62 billion GDP (PPP).

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We are in the midst of the 10 year anniversary of the S&P 500’s its pre-recession high. On October 9th, 2007, this index peaked at 1,565. Since then indexed bottomed at 666 on May 6th, 2009 but has recovered. This index is currently trading around 2,550, the highest it has ever been. The United States is in the midst of the second longest economic expansion in its history. Economic prosperity has allowed the housing market to recover and the United States Federal Government has ended its policy of fiscal stimulus by normalizing interest rates. How does this compare to Europe and Asia in the same time period?

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Over the past decade, private equity firms have surged in popularity across the globe and have presented financiers with less regulated opportunities across international industries. Investment opportunities are typically less regulated because private firms aren’t required to register with governmental organizations who regulate the trading of shares.

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Investors are investing more in equities in European markets, which is leading to a rally in the continent, despite fears driven by political uncertainty, such as Brexit and the upcoming elections in France. This is a reversal of 2016, where investors pulled out nearly $100 billion from the equities asset class, and this is seen as being driven by the hopes of a harmonized global expansion. Stock funds in American markets are facing outflows due to investor’s worries of high valuations, and political uncertainty around the current presidential administration's efforts to reach agreements on tax reform and the fiscal spending plan. It is thought that investor confidence in the global economic outlook and its resilience against shocks can be attributed to strong economic signs, such as purchasing manager indices reaching a high in the Eurozone, and easier financial conditions globally.

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Global interest rates are one of the several factors that can drive merger and acquisition activity in 2017.  The London Interbank Offered Rate (LIBOR) is connected to the United States Federal Reserve Bank’s short-term rate, which plays a role in determining the debt financing rate. If the LIBOR rises, it would make it costly for companies to borrow money, leading to less being paid for acquisitions, however, a gradual rise would soften the material impact of rising rates.

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Real estate investment trusts (REITs) are a type of investment vehicle which invests in real estate through property and mortgages, and similar to stocks, they can be traded on major exchanges. In the U.S., there are three major kinds of real estate investment trusts (REITs). Equity based REITs own and invest in properties, and are responsible for the value of their assets, and account for the majority of REITs. Mortgage REITs invest in and own property mortgages, and tend to either loan money to real estate owners for mortgages, or purchase mortgage-backed securities. Hybrid REITs are the third kind of REITs, and invest in both properties and mortgages.

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The International Monetary Fund has lowered its global outlook for the 2016-2017 year, despite a fairly strong performance during 2016. The U.K.’s vote to leave the European Union has led to uncertainty macro economically and may lead to a negative impact due to damaging investor confidence and market sentiment. The IMF is projecting that the advanced economies will hold steady with growth at 1.8% for both 2016 and 2017, and the overall global growth is projected to increase by 3.1% in 2016, 3.4% in 2017.

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In North America, there are currently two very contradicting states between the Central Banks of Canada and the Federal Reserve of the United States. According to a senior central bank official, the Bank of Canada will not respond mechanically to any future move by the U.S. Federal Reserve to raise interest rates. Deputy Governor Timothy Lane spoke to an audience in Waterloo, Ontario and stated that “tighter monetary policy in the U.S. would lead to higher market interest rates globally, producing a tightening effect for Canada.”

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East Asia is home to three of the biggest economic powerhouses in the world: China, Japan, and South Korea. Thus, the well-being of the global economy often depends on the region's pecuniary health. Central banks already hold the utmost power in this regard; yet, in recent times, each nation's bank has led endeavors to consolidate further economic control. The effects of these measures, along with last week's global market shakeups, have paved a path of economic uncertainty. Here is a look at recent developments in East Asian central banks.

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Global interest rates currently span a wide range; from Switzerland, at a negative 0.75%, to Belarus at 28.5%. Overall, 45% of the world’s central banks lowered their rates in the last year, 29% increased their rates, and the remaining 26% left their rates unchanged. Central banks are often nationalized institutions that are usually independent from the government, but whose privileges are established and protected by law.

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In 2016 much of the world’s focus has been on turmoil in the Middle East, the rise of populist governments in the western world, and Brexit. While all of these massive movements have been taking place, one of the biggest economic stories of last year seems to be on the back burner for now, the Greek debt crisis. It wasn’t so long ago that Grexit was a much more real possibility than Brexit. With the overleveraging of almost every aspect of the Greek economy and the rise of a socialist government, many were worried that Greece would be the first southern European domino to fall in a rush of indebted countries leaving the European Union. Although things are quieter in Greece for now, things are still unsteady, and it is not definitive whether Greece will experience an economic resurgence or fall further.

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Through October, the Eurozone’s economy grew at the fastest pace of the year. The rally in in United Kingdom government bonds and a higher chance of inflation has caused 10 year government bonds in the UK to now yield more than double the levels they did in August. Due to the interconnected global bond markets, the yields in Eurozone bonds rose as a result. The raise eased pressure on the European Central Bank, whose quantitative easing program prevents it from buying any debt that yields under the deposit rate of -0.4 percent.

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Central banks are responsible for determining the monetary policy by setting the interest rates to balance investments and savings, which helps to keep economies fully employed and inflation stable. The natural rate is the interest rate that helps to achieve the balance, and federal reserve policy makers believe that the rate is at 3%, down from 4.5% prior to the recession. The 1.5 percentage point decline in the natural interest rate provides less ability to counteract future economic shocks.

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From 2012 and 2015, it was estimated that budget deficits for governments in the Eurozone were reduced by 40% because of lower borrowing costs. The reduction in the cost of borrowing can be attributed to central banks policies. Low bond yields allow for governments to reduce their deficits and possibly lighten their current austerity measures, and lately, many yields have fallen into negative territory.

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A big topic in finance, and more specifically tax, is base erosion and profit shifting (BEPS). The BEPS project is a way to readjust the taxation of profits with the location of economic activities. The goal is to eliminate incidences of tax avoidance around the world once BEPS is implemented. The OECD, G20, and the United States are currently working together to recommend and propose policies to take place under BEPS.

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The global debt is currently around $60,244,106,843,495, and according to the CIA’s World Factbook, there are only two countries, Liechtenstein and Macau, that don’t owe any sovereign external debt. Both countries are fairly small, and are both resource rich, thus helping each sustain a steady flow of cash into their economies. Macau is a semiautonomous region of China, and is home to the world’s largest casinos. Lichtenstein is one of the smallest European countries, and is the largest manufacturer of fake teeth and sausage casings. Both countries don’t use their own currencies, with Lichtenstein using the Swiss franc and Macau using the Hong Kong dollar, so their governments are unable to print more currency and utilize inflationary financial policy.

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The Aussie real-estate market is an increasingly mercurial frontier for investors and home-owners alike. Housing markets are no stranger to high rates of default and bad debt, but Australia’s uniquely volatile real estate business has been steadily oscillating toward bubble status since 2001. The whole world was crippled when America’s housing bubble, launched to dangerous heights by massive collateralized debt obligations and junk bonds, eventually exploded in a manner that shook the global economy. Australian default rates are nothing short of shocking and have narrowly avoided causing American 2008-esque crashes in the past several years. The uncertainty from this part of Australia’s economy adds fuel to its fire, but other times it serves to strengthen its own currency and outperform other sectors of the global economy. But everything has a cost, and though Australia might not be facing the immediate risk of a bubble, a slow and painful demise is usually in store for those who mistake healthy credit margins for insurmountable housing debt.

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It is no secret that China has experienced massive capital outflows over the past year, and it also isn’t a secret where a lot of this capital is going. Capital flows from China to the U.S. have occurred at record levels in 2015 and the first quarter of 2016, with a large portion of these flows going into real estate and other hard assets. What is particularly interesting, however, is the recent acceleration of Chinese investment in the hospitality industry of the U.S., mainly hotels. It isn’t an entirely new phenomena, as evidenced by the Chinese purchase of the historic Waldorf Astoria in 2014 for $1.95 Billion. It is striking, however, how quickly the pace of investments has increased. Much of the high profile purchasing comes from one company, Anbang Insurance, but represents a larger ideal within China.

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Islamic finance presents an interesting contradiction between religion and modern economics. The world of finance is in large part built on the premise of interest. The debt market now dwarfs the equity (stock) market, and a majority of debt products inherently carry some form of interest. The world of Islam, however, strictly forbids usury, or the practice of charging interest. Islam is also the world’s second largest religion with over a billion adherents, which makes it impossible for its practitioners to not participate in the world of finance. This seemingly huge dilemma is solved by the practice of Islamic finance. Bridging the gap between religion and business, Islamic finance is quickly growing in both size and importance.

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Last year, $735 billion flowed out of emerging markets, Compared to $111 billion in 2014, this situation has not occurred since the late 1980’s and could be bad news for emerging markets. With all of this capital flowing out of emerging markets, this means that the money is being used to buy assets elsewhere. Unfortunately, since emerging markets are still building up their roads, infrastructure, factories, and technology to improve their own economies, they are extremely reliant on investment from developed countries. With money being taken out of these countries to be invested elsewhere, emerging markets could face a tough year economically.

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China, the world’s second largest economy and a key market for many nations, began 2016 with a slowed economic pace, as the manufacturing industry contracted for the fifth month straight in December. This suggests that the government may have to implement new policies to prevent a potential slowdown. The services sector ended positively, but the economy as a whole is still on track to grow at its slowest pace in a quarter of a century.

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Alas! After months of waiting and a volatile year in the global markets, the Federal Reserve announced Wednesday that it will be increasing rates from close to zero to between 0.25% and 0.5%. This is the first interest rate rise in almost a decade, and the effects of the increase will spark volatility in domestic markets as well as international markets. The rate hike is meant to signal economic strength in the United States by showing that the economy is strong enough to handle larger borrowing costs. Janet Yellen, the Federal Reserve chair, explained that further rate hikes will be “gradual” in an effort not to slow economic recovery.

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Ever since the financial crisis of 2008, many large central banks have used quantitative easing in order to help stimulate their respective economies. Quantitative easing is the act of buying financial assets from lower level banks, thus increasing the price of the assets and increasing reserves in the economy. This has remained a common practice in central banks, and these banks have even increased the rates of easing since this year. However, economists are uncertain of how much easing has actually helped the global economy, and are wondering if it is time for a change in monetary policy practices.

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Since last year, the rupiah has lost 10% of its value against the dollar. This is a serious matter following the Indonesian government, despite the fact that the country is currently welcoming delegations to the World Economic Forum. President Joko Widodo has promised stronger economic growth for the country, and has implemented measures to combat the currency decline. The Indonesian government hopes that by lifting visa fees for tourists and changing tax regulations, the value of the rupiah may rise again.

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Greece needs to follow European rules if it wants aid from the Eurozone during its financial crisis. The country owes other Eurozone governments around $212 billion. Germany is owed the most money, totaling over sixty million euros, followed by France and Italy. However, Slovenia may be the most impacted country by the Greek debt crisis.  Bloomberg determined that Greece owes Slovenia over 3% of its total GDP. Greece is on the bubble of a potential exit from the European Union, and a potential default on its debt.

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As people in developed countries live longer lives, companies with pension plans are facing growing pension shortfalls. The Society of Actuaries estimates that the average 65 year old man today will live two years longer than it estimated 15 years ago. This has led to large differences in the amount budgeted for pension plans and the amount actually being spent. The increased longevity of these employees’ lives has caused many major companies’ balance sheets to be changed dramatically. Most United States companies use defined-contribution plans such as 401(K)s, and these leave workers on their own after retirement. These companies will not have to worry about increased life longevity when it comes to these payments.

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McKinsey & Company, an international consulting firm, has released a report containing information on the debt of over 47 different countries. The numbers show that total global debt has increased by $57 trillion since the 2007 financial crisis, making current global debt a record high of $199 trillion. Debt is now 286 percent of global economic output, a 17 percent increase from what it was during the financial crisis. These figures expose weaknesses and trends present in all markets and countries, and also imply that many of these economies might be headed on rocky roads toward bankruptcy or severe crisis, affecting the economy on a global level. Here is a closer look.

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January was the first time in 6 months that the MSCI Emerging Markets Index outpaced the S&P 500 as it gained 0.6%. Investors sent $18 billion into emerging market stocks and bonds, after an outflow of $11 billion in December. Analysts note that low commodity prices allow for quick growth in these emerging economies. As emerging markets go through reforms in order to stabilize their currencies or stimulate growth in their economies, investors see this as an opportunity to obtain higher returns.

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After nearly two decades of deflation, Japan unexpectedly has fallen into a recession in the third quarter of this year. In a preliminary economic report released by the Cabinet Office on November 17, GDP was reported as falling at an annualized pace of 1.6% in the third quarter of 2014. In combination with the previous quarter’s 7.3% decline, this GDP decline has caused Prime Minister Shinzo Abe to dissolve the parliament and call for snap elections two years before the next scheduled elections.

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Global financial markets have suffered from selfish decisions made by central banks in various countries. There have been talks of currency wars coming from emerging markets trying to manipulate their currencies in order to get the best pricing for growth. Now, there has been currency competition within developed countries. The Fed recently decided to halt its quantitative easing operation which purchases bonds to lower long-term interest rates. When the government owns most of these bonds, the supply to the public is decreased which lowers yields and raises the prices of these bonds.

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According to a draft of a communique that the International Monetary Fund (IMF) and World Bank Development Committee plan to release on October 11, finance and development officials are warning of major current downside risks to the global economy. The major risks that are cited include potential deflation in Europe, Japanese recession, and a slowing Chinese economy.

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Argentina has been facing many economic and financial troubles these past few months. Future predictions are now showing a poor outlook for its economy, as the country is struggling with high inflation, a major decline in the value of the peso against the U.S. dollar, and more trouble involving disputes with hedge fund and holdout creditors. For a country that has had a history of economic troubles in this century, none of these things spell anything good for Argentina's future, and it only seems to be getting worse from here.

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Over the last forty years, Luxembourg has become the financial hub in Europe and has served private and corporate clients all over the world, thanks to its extremely open market policy. The country’s financial sector is well-known globally for its expertise and sophistication. Even when most countries were suffering from the financial crisis, the banks in Luxembourg continued to earn substantial profits. According to a KPMG banking report, Luxembourg's bank profits grew by 42% in 2012. So, what has contributed to Luxembourg’s success in the global financial market and what is unique about Luxembourg’s banking industry?

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Most countries' finances are dominated by their respective central banks. This makes their role, in not only their country but in the world, extremely prominent. They make large, macro policy decisions that affect even the smallest businesses. What role do these policy decisions play in the world though? With globalization and the intermingling of economies across the globe, all of these different policy decisions is sure to dictate how the world interacts.

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International economists are all asking the same question: Is the Eurozone's financial crisis over? For a region of the world that has borne some of the worst repercussions of the Great Recession, it could potentially be said now that the biggest brunt of the crisis is over, and the countries of the Eurozone are now on their (uneasy) way to recovery. However, this is not a confident prediction. Several factors, such as worryingly low inflation and high unemployment, are still present in these economies, showing that more problems may still be nigh. At this point it may be dangerous to assume the Eurozone has seen the last of its economic woes. Here is a closer look.

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This past week in Luxembourg, the European Court of Justice struck down legal opposition by the British government in order to move forward in creating a new tax law in the European Union. Commonly known as the "Tobin Tax," named after American economist James Tobin who first proposed the idea in the 1980s, the law would tax the financial sector of the EU in order to cover some of the costs placed on taxpayers in the outcome of the recent financial and debt crises. The European Commission first announced the proposition of the new law in 2011, during which it stated that the financial tax law would require institutions in participating member states to pay a tax of at least a tenth of 1 percent of the value of transactions with other institutions. Since then, debate among EU member states regarding the effectiveness and possible consequences of implementing the tax has ensued.

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Corporate style management is set to replace the current bureaucratic system of the Holy See in the near future. On the 24th of February, the Pope announced in a public statement that he is planning to make changes to its financial system by centralizing budgetary and administrative functions. As the first economic overhaul to the Vatican in over 25 years, it was decided that the Holy See will begin to operate with a system of corporate governance.

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Ever since the financial crisis hit the world in 2008 discussion has ensued on who is at fault and how can we make sure something like this never happens again. At the heart of this debate are banks - especially global ones. Legislative bodies across the globe have acted in an attempt to stabilize the banking system and stop financial panics that dry up credit. From Basel III to Dodd-Frank many attempts have been undertaken.

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Inflation has been credited with being the main reason for Moody’s Investor service choosing to downgrade Venezuela. In terms of currency, inflation has been more than fifty percent year to date, even after President Nicholas Maduro created the law to make businesses cut the cost of consumer goods. The high risk of a collapse and the economic imbalances of the Venezuelan economy have also been cited as a reason for the downgrade because the caused currency and bond ceiling ratings to move to a “speculative” grade. The government is planning on devaluing the Venezuelan currency in 2014. The current account surplus has also decreased by thirty five percent for the past three quarters in comparison to the three quarters last year. All of these statistics point to an economic collapse, but there might just be a way out.  

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Latin America has taken big steps in the last 15 years in terms of financial stability. Since 1998, the average frequency of crises in Latin America has fallen from 0.7 crises per year to 0.29 crises per year. Economists attribute this to better fiscal management, with gross domestic product becoming less reliant of government spending and outside help. The economies are starting to run with less assistance, generating a more stable financial situation with fewer crises. Latin American economies are on an upward trend nowadays, but there is still one major setback: Crime.

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Recent financial figures have shown that several countries around the globe have experienced some of their lowest inflation rates in years. Normally this would be the goal of the nations' central banks, but in the economic states of these regions, this low inflation could be the source of several problems. Now the issue facing many of the world's richest nations is to avoid extremely low inflation and to try and raise prices. The proposed processes to achieve these goals have the potential to lead to some intense competition.

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As of late, the Philippines have experienced robust economic growth coupled with low inflation.  These positive economic indicators, among other factors, have led Moody’s Investor Services to give the country an investment-grade rating.  An economic growth rate of 5.2% in 2006 has continued to climb and currently is at 7.6%- a rate that is consistent with the fastest growing countries in the region and high-growth emerging markets around the world.

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It has been five years since the collapse of Lehman Brothers, an investment bank in the United States, launched the global economy into one of the worst financial crises of all time. Since then, the United States and many other major global financial institutions have taken big steps in securing a safer worldwide financial state. The United States, along with many other countries, have made many reforms that will allow the global financial situation to become more protected. However, there are new areas in the world which could threaten the state of global finance.

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A new wave of start-ups are forever changing the way people view the borrowing and saving of money. These financial-technology firms, or fin-tech firms, are gearing away from large corporations, such as Western Union, and are now relying on safe technology to enhance the financial world from the comfort of their warehouses. The many rising firms are reaping in the profits, while simultaneously sparking interest in investors and challenging the institutions that have reigned over the financial world for years.

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Despite looming budget cuts that sequestration has promised for the United States, investors seem unconcerned, considering the record-breaking levels the Dow reached just last week. With help from the Chairman of the Federal Reserve, Ben Bernanke, propping up the market, the Dow reached 14,286.37 last Tuesday to break the previous record of 14,198.10 from October of 2007. Although this is exciting news for investors and publicly traded companies, there are several concerns resounding with this new, record-breaking high.

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The last few blogs here on globalEDGE have not been too optimistic and may make one think that the world may indeed end in December (as the Mayans allegedly predict). This blog will not be much more optimistic. However, instead of just talking about recessions, this will explore some of repercussions or causes that are being observed right now. Specifically, this will explore the potential permanent change in the financial services industry.

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The global economy came to a stall earlier this summer with China slowing and the European debt crisis worsening, many investors and business owners were expecting the worst.  The Federal Reserve has already promised to keep short-term interest rates at zero until 2014 and flattened the yield curve through Operation Twist. If that can’t spark any economic growth, then what is there left to do?

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As the date of the Facebook Initial Public Offering (IPO) creeps closer and closer, interest in the stocks of other social media companies has been growing.  This is especially true among social media companies that have recently begun trading their stocks publicly.  Social networking companies in the United States, as well as in Latin America and China have seen their stock prices increase significantly thus far in 2012.  As social media grows more and more popular, stocks in this industry are receiving a lot of attention.

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Last month, Hong Kong was reported to be the world’s most developed financial market by the World Economic Forum, an independent international organization.  The responsive business environment and financial stability most industries found in this special administrative region of China, along with its efficiency, size of banking, and other financial services catapulted Hong Kong to the top, surpassing the United States, the United Kingdom, and Singapore.  The rise of Hong Kong has been attributed to non-banking services, like IPOs and insurance, which offer long-term yields rather than the shortsighted investments that Western financial markets tend to favor.

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Two weeks ago, the European Central Bank (ECB) raised its benchmark interest rate from 1 percent to 1.25 percent, putting it at odds with its counterparts in the United States and Britain. This move has sparked a debate as to whether the ECB jumped the gun with the interest rate hike.

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Comparing major financial cities across international borders is a challenging task for any organization to accomplish.  Using people, business environment, market access, infrastructure and general competitiveness as categories of competitiveness to be evaluated, the Global Financial Centres Index ranked the top 75 favorable cities for doing business.  London, New York and Hong Kong ranked as the top three cities and were considered essentially equal by researchers.  Taken as a whole, the list reveals many current and future trends in the global business world. 

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Although somewhat unknown in everyday international business language, a new term is being coined by investors everywhere: Frontier Markets. Most of us have heard of emerging markets, which are known to be very promising markets where investments carry great potential, but are not quite as stable as in developed countries. There are many articles being published about this relatively new category of market investments.  But what are frontier markets? This week’s blog series will not only establish what they are, but also provide some insight into their implications on the future.

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Following the recent financial crisis, many people are blaming the large banks almost solely for the collapse. Many feel that the banks must split their commercial banking divisions from their investment banking ones. People think that the banks should not be allowed to use the money they hold for customers in speculative investments for the bank's potential profit. Do these concerns sound familiar?

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The U.S. dollar has, for a long time, maintained its position as the world’s reserve currency. That fact, though, could be changing. As the debt of the U.S. government grows, it is possible that the dollar will lose its significance and subsequently its role as the world’s reserve currency, most likely to China's yuan. The ‘safe haven’ aspect of the dollar will not be easy for China to overcome, but with China’s economy growing as strongly as ever, it could be possible. Furthermore, China has been making financial moves which could land the yuan in the role.

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When the global financial crisis hit, many nations saw a drastic decrease in their national wealth. While Tunisia suffered a slight decline in GDP by the end of 2008, its losses were not even close percentage-wise to those of other developed nations. The key to Tunisia’s economic resilience may be due to the fact that it is still undergoing a period of rapid economic growth and development. It may also be due to the fact that Tunisia’s economic backbone is based primarily on a labor-intensive workforce, and boasts a diversified economy with minimal exposure to the finance industry. Whatever the reason, Tunisia provides a strong example of what steps should be taken in order to get a country on the track to economic growth.