In addition, larger integration into the international financial system may contribute to the efficient functioning of the entire economy by providing additional financing at a reasonable cost to domestic agents, by facilitating the transfer of technology from abroad and by stimulating the performance of the domestic financial sector. However, financial globalisation may also entail some risks.
Increased international financial integration is likely to lead to a larger sensitivity to external spillovers. In addition, financial globalisation is likely to induce stronger and faster transmission of shocks across countries.