At this point, it is worth noting that many developing countries, particularly emerging market economies, have actively participated in the world trade and global economy over the last two decades. The presence of emerging market countries, particularly the Asian economies, is growing, and their share in world trade has increased significantly. (b)  Secondly, the importance of non-bank financial institutions in the financial intermediation process has increased. The main examples of these institutions are securities firms, insurance companies and mutual funds. Therefore, we can say that the higher the level of international competition, the higher the economic growth, the higher the income level, the higher the quality of products and thus the higher the living standards the globalization process would bring. (3)  Globalization reorganized some concepts such as stabilization, risk-taking, supervision and regulation of banking systems, market discipline, public guaranty on deposit and moral hazard. As I mentioned earlier, parallel to the development of new financial instruments and markets and the resultant more complex and dynamic transactions, risk measurement and risk management techniques have changed dramatically. Financial institutions have increasingly been using internal rating and other risk measurement systems and models such as VAR, stress and back testing, and scenario analysis. As a result of these developments, every trading institution, including central banks, has become more exposed to changes all over the world economies and financial markets. Indeed, the recent Asian financial crisis revealed that the financial and economic stability of emerging market economies is extremely vital for global financial and economic stability.

I, personally, consider globalization to be both a beneficial and a challenging, inevitable, irreversible process for the world economy and the international financial system. Globalization and liberalization of financial markets bring a variety of changes, presenting opportunities as well as risks both in economies and financial systems throughout the world. One fact is quite clear: the undeniable benefits of globalization are only available to the countries that best manage their economies. (1)  One obvious benefit of globalization is that active international capital flows improve the efficiency of the allocation of world financial resources. As the world market economy has become more globalized, we have witnessed rapid growth in world trade, leading to a higher standard of living during the 1980s and 1990s. In plain language, competition, productivity gains, lower trade barriers and lower cost of external financing on a worldwide basis are the key factors that have led to growth in world trade and rising standards of living. (2)  Globalization also has increased and enhanced competition worldwide. There are several factors behind this consequence. (a)  Firstly, the integration of world markets and rapid technological change led to efficiency gains and growth driven by the lower transaction and information costs. These in turn increased competition through lower costs and higher market efficiency, higher productivity, lower barriers to entry, and new investment opportunities. Geographic distance is no longer a factor that limits the provision of goods and services. Hence, competition both in the industrialized and developing countries has reached almost the same level.