Financial Markets

Financial markets, i.e. markets for loans, currencies and securities such as bonds, shares or derivatives, play a decisive and dominant role in today's global economy. These markets have been heavily liberalized in recent decades. Many people have become aware of the dangers of this since the 2008 financial crisis at the latest.

However, even in phases without an acute financial crisis, liberalized and excessively large financial markets often exert a damaging influence: from financial products that are primarily based on speculation to the excessive distribution of corporate profits to shareholders at the expense of employees and future investments. Financial markets are currently an important factor in the growing gap between rich and poor and increased inequality. This also applies on a global scale.

Most countries in the Global South have to pay many times more interest on international capital markets than countries in the Global North. Their increased access to international financial markets comes with many risks. These are due, for example, to the complex financial products themselves, the greater alignment of infrastructure and social welfare with the logic of the financial sector, the often abrupt withdrawal of capital in times of crisis and the increasing debt burden.

Powerful states, financial players and the World Bank invoke private capital and financial markets as saviors in the climate crisis and for development financing, which Daniela Gabor has aptly analyzed as the new “Wall Street Consensus”. WEED is critical of this focus on private financial capital because we know that political solutions and far-reaching economic transformation are needed.

WEED has been advocating the limitation and strong political regulation of financial markets for many years. Financial markets and banks should first and foremost be geared towards providing funds for (sustainable) real investments. Strong regulation must also include decisive action against shadow financial centers and the curbing of speculation, e.g. through a financial transaction tax and bans.

WEED is a member of Finance Watch, which advocates for better regulation of the financial sector at European level and tries to counter the influential financial lobby in Brussels.