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Capitalism

ROLE OF THE U.S. TREASURY three key markets in the global financial world of the
The U.S. Treasury is the biggest player in the U.S. credit twenty-first century.
markets. Because the market in U.S. government securi-
SEE ALSO Finance
ties is the largest, most active, and most liquid market, it
creates a base for conditions in the U.S. credit markets.
The Treasury operations bridge the timing of the cash BIBLIOGRAPHY
inflows and outflows of the government. The extent of Board of Governors of the Federal Reserve System. (1999). The
activity is related to whether the federal budget is in deficit Federal Reserve system: Purposes and functions. Retrieved
or surplus. As anticipated, federal debt is expanded when December 16, 2005, from
a deficit is faced and is retired when a surplus arises. http://www.federalreserve.gov/pf/pf.htm
Burch, John C., and Forester, Bruce S. (2005). Capital markets
REGULATORY REQUIREMENTS handbook (6th ed.). New York: Aspen Law & Business.
Regulation plays an important role in a fair and orderly Kidwell, D. S., Blackwell, D. W., Whidbee, D. A., and Peterson,
functioning of the capital market. Parts of the market are R. L. (2005). Financial institutions, markets, and money (9th
more heavily regulated than other parts. Commercial
ed.). New York: Wiley.
banking, for example, is one of the most regulated parts of
Kohn, M. (2003). Financial institutions and markets (2nd ed.).
the financial services industries. This heavy regulation
New York: Oxford University Press.
came about because large bank failures, due to either fraud
or mismanagement, can destabilize banking markets and Madura, Jeff (2006). Financial markets and institutions (7th ed.).
lead to loss of faith in the banking system—and therefore Cincinnati: Thomson South-Western.
in the currency and money (as the liability of commercial Mayo, Herbert B. (2004). Financial institutions, investments, and
banks). management: An introduction (8th ed.). Cincinnati: Thomson
The Gramm-Leach-Bliley Financial Services Mod- South-Western.
ernization Act of 1999 has reduced or eliminated the need Mishkin, F. S., and Eakins, S. G. (2004). The economics of money,
for many of the regulations on commercial banks and banking and financial markets (7th ed.). Reading, MA: Addi-
their activities and affiliations with investment banks and son-Wesley.
insurance companies by allowing competition for the
Molyneux, P., and Shamroukh, N. (1999). Financial innovation.
same or similar products offered by the three. This act
New York: Wiley.
provided for an eighteen-month period for the SEC to
implement the provisions related to rule making. A num- NASDAQ. http://www.nasdaq.com retrieved February 2, 2006.
ber of new regulations have been issued since 2001 by the New York Stock Exchange. http://www.nyse.com retrieved Feb-
SEC. ruary 2, 2006.
Rose, Peter S. (2005). Money and capital markets (8th ed.). New
KEY CAPITAL MARKETS OUTSIDE York: Irwin McGraw-Hill.
THE UNITED STATES Securities and Exchange Commission. http://www.sec.gov
The increasing integration of the world economy and the retrieved February 24, 2006.
growth of other economies have led to the emergence of Seifert, Werner G., Mattern, G. F., and Streit, C. C. (2000).
several key financial centers, the prime examples of which
European capital markets. New York: St. Martin’s.
are London, Tokyo, Frankfurt, Zürich, Paris, Hong Kong,
Stulz, René M., and Karolyi, G. Andrew (Eds.). (2003). Interna-
and Singapore. Efforts at cross-border exchanges have
tional capital markets. Northampton, MA: Edward Elgar.
been successful, too.
Euronext N.V. was the leading cross-border exchange Tobin, James (1989). Financial intermediaries. In John Eatwell,
organization in Europe in 2005. It began in 2000, headed Murray Milgate, and Peter Newman (Eds.), The New Pal-
by a Dutch holding company. By 2004 this cross-border grave: Finance (pp. 35–52). New York: Macmillan.
exchange was providing services for regulated stock and
derivatives markets in Belgium, France, the Netherlands,
Surendra K. Kaushik
and Portugal, as well as in the United Kingdom (deriva-
tives only). In late 2005 Euronext was the leading deriva-
tive exchange in the world and Europe’s leading stock
exchange, based on trading volumes on the central order CAPITALISM
book. The euro area capital market, the U.S. capital mar-
ket, and the Asian capital market were predicted to be the SEE Economic Systems

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