Home Technology News The Role of Technology in Shaping International Trade and Monetary Policies

The Role of Technology in Shaping International Trade and Monetary Policies

Policymakers should embrace technology and what it can do for the global economy but must also keep in mind the threats that are posed

Edward Jones - Thu, 11 May 2023 20:27:00 +0100 1503 Views
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As technology has become increasingly globalized, its influence on international trade and monetary policies has grown exponentially. Technology advancements have enabled countries to more easily engage in cross-border investments and create new markets for goods and services. It’s important to understand the role technology can play in global markets, particularly in light of how fast technology seems to be moving.


Technology as a Catalyst in International Trade


It’s no secret how much of an impact the internet has had on the global economy, from the early days of online marketplaces like eBay to now where anybody can easily set up their own e-commerce store in a matter of hours if not minutes. This has enabled small businesses in developing countries to access larger markets and generate revenue that would have previously been impossible.


Technology has also streamlined many of the processes associated with international trade. Even though the global supply chain has faced some problems in recent years, things like shipping, customs clearance, and payment processing have all been made easier through technology. Even things like signing contracts and storing documents — previously very paper-heavy tasks — are much easier today, thanks to technology.


The Influence of FinTech


Financial technology (FinTech) is playing an increasingly important role in finance. For example, FinTech tools like the DXY chart — a measure of the US dollar’s value against a group of currencies from around the world — help traders make real-time decisions and gauge the overall direction the dollar is moving. One way this is useful is from a risk management perspective. If a trader has positions in multiple assets that are sensitive to the US dollar, then this can help them manage their exposure should the dollar’s value start to change.


As the way currency exchange occurs across borders has changed — thanks to payment processing companies like Stripe — countries have responded. Some governments have started using FinTech services such as e-wallets to ensure that national currencies remain competitive internationally. By doing so, governments can better control exchange rates without resorting to costly interventions every time there is an increase or decrease in demand for certain currencies.

 

Challenges and Future Prospects


The rapid pace of technological changes and the sometimes glacial pace of governments are at odds with one another. One area where this has reared its head is cybersecurity. We all get excited about how technology can change our lives and make things easier, but bad actors do, too. Particularly if important and private information becomes compromised, this could damage relationships between countries and lead to less cooperation between them.


At the same time, technology also presents many opportunities for international trade and monetary policies. We spoke earlier about how technology has streamlined many cross-border processes, and the rise of AI and machine learning have the potential to speed that up even more. Not only will cross-border trade become more efficient, but it will also have improved transparency over traditional methods like paper-based trading systems.


Technology is an increasingly integral part of international trade and monetary policies. As with anything, it’s important to strike the right balance. Policymakers should embrace technology and what it can do for the global economy but must also keep in mind the threats that are posed.

 

 

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