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The 'main' part of financial markets allocate resources within the economy. In a capitalist / free market system, they perform the role of economic central planner, "choosing" the best industries for a country to develop by allocating resources, in the same way . As such they are the core of free market economies.

In addition, there is a derivatives market which shifts risk around, moving risk towards those best able to bear or control it.

Finally, the currency market facilitates international trade

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15y ago

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