Get to know the Meaning of International Financial Policy, Organizations, and Types of Markets

Policy International finance is a country's policies that can affect the international economy. One of them is trade relations between countries.

International finance itself discusses the dynamics of the global financial system, the international monetary system, the balance of payments, exchange rates, foreign direct investment, and its relationship with international trade.

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Scope of International Financial Policy

Based on the book International Economic Policy by Emmy Lilimantik, policy finance International law is an action or government economic policy that directly or indirectly affects the international economy.

The international financial policy aims to maintain a balance in the trade balance and maintain the balance of payments conditions stably against changes in cash.

The scope of international financial policies includes:

1. International Trade Policy

This policy includes actions on the current account relating to export and import transactions.

This regulation covers tariffs, subsidies, bilateral trade agreements, free trade areas, and so on.

2. International Payment Policy

This policy includes action on the capital account by exercising control over international payments. Including those using foreign exchange flow control tools and long-term capital.

3. Foreign Aid Policy

This policy covers government actions related to grants, loans, assistance aimed at assisting rehabilitation and development, and military assistance to other countries.

International Financial Organization

Based on the book Diktat Courses in International Finance by Posma Sariguna Johnson 

Kennedy,organization international finance consists of:

1. International Monetary Fund (IMF).

The IMF was founded in 1944 with its main objectives, namely:

• Assists cooperation between countries on international monetary matters.
• Seeking stability in world currency exchange rates.

2. World Bank (WB).

WB was founded in 1944 with the main objective of providing loans to a country to strengthen its economic development. WB's main source of funding is the sale of bonds and other debt instruments to private and government investors.

The foundation of WB's establishment is to make a profit. Therefore, the loans provided are not grants but are given at market interest rates.

3. International Financial Corporation (IFC).

IFC was formed in 1956 to assist the establishment of companies within a country. IFC works to foster economic development through the private sector and not the government sector.

This organization not only provides loans to companies but also buys shares, so those who become shareholders are not only creditors.

International Financial Markets

Based on the book Diktat for International Finance Subjects by Posma Sariguna Johnson Kennedy, the following are the types of international financial markets.

1. International Exchange Rate Market

This market allows currency exchange to facilitate international trade or financial transactions.

2. Money Market

Money market international consists of several banks that accept deposits and offer short-term loans in various currencies.

3. International Credit Market

The market consists of commercial banks converting a portion of their deposits into medium-term loans to governments and large corporations.

4. Bond Market

MarketbondInternational markets are markets that facilitate international long-term credit transfers. This allows governments and large corporations to borrow funds from various countries.

5. Stock Market

Market share enables companies to obtain funding from foreign countries. This sector helps multinational companies to finance their international expansion.