Markus Bruetsch 
International Banks and the Rise of financial Derivatives [PDF ebook] 

Essay from the year 2003 in the subject Business economics — Banking, Stock Exchanges, Insurance, Accounting, grade: 1, 9 (B+), Oxford Brookes University (Business School), course: Practise of International Banking, language: English, abstract: Derivatives trading is now the world’s biggest business, with an estimated
daily turnover of over US$2.5 trillion and an annual growth rate of around
14 per cent (Swan, 1999). Derivatives markets have ancient origins, and
a long and complex history of trading and regulation. This work examines
the history of derivatives and their impacts on the structure of
international banks in order to show the implications of modern
international banking in comparison to domestic banking. Mishkin (2003) describes banks as financial institutions that accept
deposits and grant loans. In this definition banks are the financial
intermediaries that the average person contacts most frequently for its
financial dispositions, savings, investments and payments. The structure
of a bank therefore seems to be adjusted to the purpose of its business
activity. Mishkins traditional definition of a bank includes to those financial
institutions we refer to as mutual savings banks, savings and loan
associations, commercial banks and credit unions. Their traditional core
business is to provide the settlement of national payments and to
transform funds from savers over time as well as to process market
information (Canals, 1997). They focus on domestic or regional,
eventually even local markets and realize their profits from interest
margins and balance sheet activities. Therefore they employ an asset- and
liability management in order to avoid liquidity and credit risks.