Information Technology and Financial Markets

Much has been written about information technology and its role in reinventing financial markets. Today’s markets are truly global, and the interconnectedness is the result of information and communication technologies (ICT) providing the necessary infrastructure. A financial crisis in any part of the world can cause widespread disruptions due to this interconnectedness. Clearly, the Asian crisis in the late 1990s, the sub-prime mortgage loan issues in 2006 and 2007, and the problems occurring in Greece and the U.S. “Flash Crash” in 2010 were exacerbated by the ability of technology to allow financial markets to instantaneously respond in a negative fashion.