“International Trade &amp




According to Mishkin, globalization is essentially about economic integration, which implies the opening up of national economies to the external inflow of goods, services. Contrary to earlier beliefs, globalization is hardly a new phenomenon, dating back to the end of the 19th century and the age of industrialization. “The globalization system, unlike the Cold War system, is not static, but a dynamic ongoing process: globalization involves integration of markets, nation-states and technologies to a degree never witnessed before — in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is also producing a powerful backlash from those brutalized or left behind by this new system”. Yet, even today it is too early to say that globalization has achieved its peak. Central banks are still in their way but far from achieving real financial globalization. The latter presupposes having a single global currency and a single global financial authority. According to Way, “independent central banks produce sharply lower inflation rates where Left cabinets are prevalent but at a cost of increasing unemployment”. In the absence of financial stability and global financial homogeneity, central banks acquire a new role of adjusting their decisions and exchange rates policies to the needs of the international financial community, including the issues of currency convertibility.