International finance – or international macroeconomics – looks at various interactions between the financial markets of countries, such as foreign direct investment and foreign exchange rates.

The international financial system is an economic arrangement between the financial institutions of different countries that allows the transferring of funds between those countries. The financial institution that represents a country is known as a central bank and it manages its currency as well as upholding economic policy.

The central bank:

Oversees the commercial banking system
Controls the total amount of money that can be created and within the country
Has supervisory and regulatory powers to ensure the stability of member institutions
The pandemic has highlighted many weak points in international trade, such as supply chains, as well as exacerbating precarious political situations including Brexit and the US-China trade dispute. To add to this, the shift in people’s spending patterns and loss of profits in areas such as aviation and travel have had a major impact. All these factors have an effect on the global economy and international trade and will continue to do so. The response from central banks is key to keeping the global economy afloat.