Yoon S. Park’s research while affiliated with George Washington University and other places

It is well known that the State of Alaska has experienced severe economic difficulties in recent years. The adverse economic impact on the people of Alaska is exacerbated by the fact that the state used to enjoy bountiful economic growth in the 1970s riding on the crest of the Alaskan oil boom.

The development of international financial centers (IFCs) has paralleled the rapid expansion of international banking and Eurocurrency activities. During the past decade and a half, the international banking and financial markets have experienced phenomenal growth along with the parallel expansion of IFCs. The size of the Eurocurrency market grew from $110 billion in 1970 to over$4,000 billion by 1987, while the total international assets of all banking institutions rose from $130 billion to$4,800 billion during the same period. Some of the preeminent IFCs are playing a major role in the international financial markets, as demonstrated by the size of their international assets: Bahamas ($144 billion), Cayman Islands ($174 billion), Singapore ($150 billion), Hong Kong ($130 billion), Bahrain ($46 billion), and Panama ($32 billion). The patterns of Euroborrowing and Eurolending activities in these IFCs have been undergoing major changes. These changes came about as a result of the introduction of the floating exchange rate system in 1973, recent financial deregulation, internationalization of the financial markets, securitization of financial assets and liabilities, and global financial innovations. Since the pioneering work of Kindleberger in 1974 on the formation of financial centers, there has not been a comprehensive study to reflect the recent developments, trends and the mystique that have surrounded the IFCs' functions and operations in the international money and capital markets.

In recent years the volume of cross-border international financial flows has risen sharply, dwarfing that of international trade. While the total world trade volume has reached the $4 trillion mark a year, the total cross-border international financial flows are about fifty times as much, estimated at$200 trillion per year. Thus, unlike in earlier decades the engine of growth in international financial flows is no longer the world trading activities but the accelerating momentum of international financial market activities. The huge volume of cross-border financial flows is directly related to the enormous size of the international financial market system. As of the end of 1987 the gross size of the Eurocurrency market was $4.4 trillion, while the total amount of funds raised on international financial markets reached$384 billion in 1987.1