U.S. Capital Markets Leadership in the Changing Global Economy
J. Carter Beese Jr.
Once confined within boundaries and borders, capital is now capable of disregarding those restrictions as new developments in technology, consolidation of financial institutions, increasing liquidity of previously restricted capital, and harmonization of accounting standards accelerate the speed and size of cross-border capital flows. As capital markets continue to integrate, it is becoming harder for the United States--and the rest of the world--to distinguish between what is considered a "foreign" policy matter and what was once viewed as a traditional "domestic" concern. Moreover, U.S. and foreign investors have been increasing cross-border investments, further eroding those boundaries that used to segregate foreign and domestic issues.
Foreign holdings of U.S. securities have grown from just under $950 billion in 1990 to nearly $3,365 billion in 1998. Similarly, U.S.