Financial markets fueling speculation and systemic risks, impacting global economy.
Financial markets play a crucial role in managing risks faced by individuals and firms. They allow for the valuation and transfer of risks through various products like derivatives. While these markets can help in hedging against risks, they also pose the risk of speculation and systemic risks. By using information to create relevant indices, financial markets can better serve people in managing risks. However, it is important to regulate the development of derivative products to prevent unwanted effects like speculation and increased systemic risk.