In this revision video, we cover an important concept in the global financial system – namely inflows and outflows of hot money
Hot money is money (or financial capital) that flows freely and quickly around the world looking to earn the best rate of return.
Hot money might be invested in any financial asset whose value is expected to rise such as property or shares, or simply saved in commercial bank accounts of a currency offering the best post-tax rate of interest.
Why can hot money be significant for a country’s economy?
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