A well-functioning financial system channels resources and capital from those who hold them to those who can put them to productive use. By strengthening incentives to save and invest, a modern financial system spurs economic growth. Investment and finance have become a global matter, and, for developing and developed economies alike, liberalization is not enough. To reap all of the economic benefits that can come with contemporary financial systems, countries must integrate their domestic financial systems into the emerging global system.
Integration is a key to tapping global financial resources.
Much of the potential that liberalization offers in a globalized financial system is not realized without the mechanisms for smooth business and regulatory interaction that are established through integration. Although global integration is the ultimate goal, regional and subregional integration are progressive steps along the road to global integration. That effort should focus on adopting and implementing internationally preferred standards and practices. The best environment for liberalization and integration is characterized by well-developed and stable systems of government, macroeconomic management, laws, regulation, and taxation. Also important is a high level of transparency that ensures accurate and liberal public disclosure of laws, regulatory systems and procedures, government and private sector economic information, and investment-related information.