Federal Reserve controls financial activities in USA in order to safe guard interests of American citizens. This means that they control businesses to make sure that their citizens are given the first priority in investments. Then foreigners get considered after the locals have established their businesses. The author of this article explains how the Federal Reserve has cleared a Chinese bank to run its operations in USA.
In fact, this has been the first foreign bank in history be allowed to take over an American bank. The industrial and commercial bank of China were allowed to buy high percentage stake in a bank which was a subsidiary of the bank of East Asia. There were other banks from China which were allowed by the central bank to open branches in Chicago and New York. These banks are bank of China and the Agricultural bank of China.
These changes have been achieved due to the fact that American leaders have realized that they can trust investors from other countries to save some of their dying institution. Some readers term these as great achievements in American history.
For instance, in 2009 the American government declined to allow a Chinese bank to buy a falling united commercial bank (Kurtzleben 24). This was due to strict policies put forward by the federal government leaders who believed that America can solve its problems solely.
Current American leaders are considering allowing foreign investors into their country in order to get access to external market for their products. This can be achieved by first ensuring that the relationship is enhanced between target countries and USA. Many people were shocked because it was unusual for a bank from a communist country to take over U.S banks and their branches.
Moreover, the central bank scrutinized Chinese banks before approving them to carry out their operations in American market. In fact, China had to maintain international standards in order to have its banks allowed to operate in America. This means that the IMF had to approve banking standards in China. Americans are bowing down to pressure brought about by globalization hence allowing foreign investors into their economy.
Chartering is where banks are permitted to carry out business in given places. For instance, Chinese banks got charters from federal leaders. This means that these banks did not just venture into the market but went through thorough scrutiny to ensure that they met American banking standards. For many years, American leaders practiced regulatory forbearance, which aimed at improving banks competitiveness hence helping them to solve their own problems.
This was aimed at keeping off foreign investors regardless of how much the business deteriorated. Eventually American leaders decided to bow down to pressure exerted to them by globalization to revise their regulations regarding foreign investors. This is extremely powerful because there is a need for various organizations and countries to come together in order to reap from globalization.
Therefore, America had no option but to allow China and other states to venture into its economy. In return, America has to enjoy several benefits which include business deals. This happens where China gives America fantastic deals hence encouraging them to improve their businesses in China. Globalization has contributed to increase in foreign investments due to enhanced communication networks. Therefore, every country should embrace globalization by encouraging foreign investors to their markets.
Works Cited
Kurtzleben, Danielle. “In the Red: Chinese Banks Moving Into U.S. Market.” USNews. May 10, 2012. Web.