Page 16 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

INTRODUCTION

Introducing the New

Global Players

The world of finance is being transformed before our eyes. Many of
the long-established “rules” of capital markets face fundamental
questions and rapid change. Long-revered multinational banks have
been deeply shaken by a global financial crisis, in which Wall Street
giants like Citigroup and Goldman Sachs participated in massive
“troubled asset” programs. Recognizing the regulatory lapses that
contributed to the financial crisis, regulators around the world have
taken more activist positions and increased their intervention in capital
markets. At the height of a credit crunch fueled by the spread of
misrated and opaque “toxic paper,” money markets in the United
States faced unprecedented pressure—in an extreme episode, even
money market funds briefly slipped into negative returns.
This transformation of financial markets—which was still under-
way at the time of this writing—reflects the changing topography of
the global economy. Large, developed economies such as the United
States and the United Kingdom have taken on unprecedented levels
of public debt to stimulate their domestic economies and stabilize key
economic sectors. These measures, which were considered essential
for economic recovery, have set the stage for long and protracted

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