What would the world be like without the US? (2)

I will discuss what the world financial market would be like without the US. The US is the largest financial market in the world, it attracts the most investment all over the world while it exports investment as well. The world financial market might become incomplete without the US financial market, as the US banks and other financial institutions are providing much more opportunities and financial instruments for investors. Although more complex financial instruments can increase the systematic risk as investors may find it difficult to completely understand these instruments, which leads to the world financial market might have lower systematic risk without the US financial market. Furthermore, the British gilt, the German government bonds and even the Chinese government bonds would become more expensive (their yields would decrease) without the US financial market, since they are the best alternatives to the US Treasury bills.

As I said previously the US is the world centre of investment and other financial activities, the global financial market would require new orders and rules without the US. London is currently the financial market centre in Europe, but its position could change after Brexit. Shanghai, Hong Kong and Tokyo are battling for the financial centre in Asia. The global financial market would have several years without a centre if the US disappeared, this could worsen the efficiency and productivity of the world financial activities and increase the transaction costs.

The world financial market would be worsened as losing efficiency, productivity and even completeness, but the decentralized and simple system might have lower systematic risk, if the US disappeared.