Financial Deregulation and the Transformation of International Risks Insurance

Abstract

The forces of global economic change now directly affect most states, and many of them have implemented liberal foreign economic policies. This is particularly clear in the financial sector, as one country after another has lifted capital controls and deregulated their financial systems. Financial markets are more integrated globally now than at any time since World War II, and the ease with which both productive investment and speculative capital shifts across state borders in search of profitable opportunities has increased tremendously. This increased capital mobility has created fears that the result will be financial instability, as reflected in the growing literature on ‘hot money’ and ‘casino capitalism’.¹ In addition, there is mixed but increasing evidence that the changes in financial systems have constrained the policy choices available to most governments, and redistributed power within societies by creating wealth for some and poverty for others.’ These changes in major financial markets also have reworked allied sectors of the economy, both directly and indirectly, in ways we are only beginning to understand.