World Economics is Driven by Central Banks and Global Banks

We tend to think that the large banks in today’s business world are the ones that have the global financial power. They have influence that span across many nations. However, they’re not as powerful to control world economics. The true captains of economic policies and world economies are the central and global banks such as the World Bank and the International Monetary Fund (IMF).

The Washington Consensus developed laws that granted these organizations the global influence they have today to control world economics. The consensus includes ten economic policy recommendations aimed at guiding economic development for developing countries. These institutions therefore interfere in affairs of developing nations and economic policies. Recently, China also attempted to redirect global trade domination with its own Beijing Consensus Initiative – One Belt, One Road.

Initially, central banks main task was issuing currency with no connections to governments. But since the 18th and 19th centuries, their roles have evolved after switching from currency exchanges to banknotes printing which granted them more monetary freedom for themselves and their governments. There have been debates to allow central banks to draft monetary policies away from politics and political pressure, and many are termed independent institutions. Still, their governments actively influence central bank’s policymaking. For instance, South Korea in 2014 had the government put enormous pressure on the Bank of Korea to reduce interest rates for an increase in economic growth. The initiative was indirect by the government, but it changed the monetary policies

Latest News Concerning the World Economics and Economic Policy

World economics is the global trade of goods and services in the form of cash. At times, some people refer global economy as the global or international financial system. The rise or fall of the economy is the determining factor for the expansion of international businesses. Consistent stock exchange results in the quick development of the world economy.

Economic policy is the steps taken by various governments in the world to venture into the trade and industrial fields. Additionally, it involves setting heights of interest rates, labor markets, national budgets, tax variations and supply of money. Economic policy is majorly for the thriving of the world economics. Hence, a well set economic policy results in a tremendous growth of the global economy.

Top World Economies

Currently, United States has the best economy in the world. However, its position is lately in a threat by the China’s fast growing economy. The advanced technology, plentiful natural resources, and outstanding infrastructure are the factors that have made U.S feature out as the superpower of the world economy since the beginning of ranking in 1871.

According to the 2017 estimates by the International Monetary Fund’s World Economic Outlook Database, the top ten world economies include United States, China, Japan, Germany, United Kingdom, India, Brazil, Italy, and Canada simultaneously. The nominal rates of the ten economies contribute more than half of the world economy.

China’s Rise and Threat to the World economic Superpower

For the last 30years, the economic development performance of China has been impressive. According to the World financial analysis, China posted the highest gross domestic product surpassing the U.S economy in 2014. Since then, it has been a significant threat to the United States.

United States Financial Plan to Raise Their Economy

The stiff competition from various nations like China makes the U.S economists come up with new unique economic ideas. Currently, they have come up with a strategic plan to improve their economy. The method includes inoculation of capital for the banks to absorb unpredictable losses and to open out Fed’s program to sustain lending of services to the consumers. U.S focuses on maintaining their pace as the economic giants in the globe.