Finance Unleashed by Magnus Lind & Kelly Barner

Author:Magnus Lind & Kelly Barner
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Conclusion

One of the tasks of finance is to ensure liquidity, funding, and trade finance. Here Charlie describes these tasks in an economic context and explains how these practices have developed over time. Charlie starts by presenting how the Bank of England made factoring available for export and import firms through bills of exchange over a century ago. As a central banker and economist, he takes a more holistic process flow perspective than do most corporations. From Charlie’s description, isolating finance seems irrelevant.

Charlie relates to the customer by considering how the financial system can support growth and by proving the need for a well-functioning and stable financial platform. He notes that one of the consequences of the financial crisis has been some de-globalization of banking (withdrawing to their home markets in order to reduce risks) while the business world has been moving in the opposite direction. That has complicated the provision of financial services to multinational companies. One solution is thorough networks of correspondent banks, although technological advances may mean other solutions are now viable.

Economic statistics, such as GDP and inflation, are key indicators for business. Charlie notes that these are becoming progressively less reliable. Aside from the fact that the services side of the economy is not accurately measured, the digital economy is leading to new business models that are not well captured in the official statistics and the disintermediation of activities out of the market economy into home production. Finally, the challenges of allowing for quality change and new products are becoming ever greater.

Key Take-Aways

The need for standardized, robust relationships between banks and commercial entities is not new – in England in particular, they date back to the nineteenth century. At that time, however, goods moved far more slowly than funds – at least when they were transferred in person – and it was the banks that provided valuable financial services to individuals and businesses.

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