【正确答案】The crucial message of the financial liberalization thesis is that it is the lack of competition, which brings inefficiency to the financial sector. Interest rate liberalization is a first step, but it was recognized that this alone would not generate competition in this market, since this market operates within the frame of oligopolistic competition. Consequently, not only is there a need to increase the number of players in this market, but also to tap a larger pool of savings, which a country may be required to seek beyond its own domestic boundary. To increase the number of players there is a need to remove entry restrictions so that other banks and Non-Bank Financial Intermediaries (NBFI) as well as overseas banks can enter into this market. In order to tap a larger pool of savings, there is a need to remove controls over the purchase and sale of foreign currency. There is also need to relax laws relating to takeover and merger activities, and, consequently, the requirement arises to liberalize the external sector of the financial system. 　　A view thereby emerged, similar to that of the school of financial liberalization, that government intervention in the foreign exchange market to determine the price of currency, could cause a great deal of distortion in the allocation of exports and imports. So much, that an undesirable imbalance between imports and exports may ensue (Krueger, 1974; Cordon, 1981). This problem might have been further aggravated by the undue restriction on foreign direct investment. That may have caused debt to rise to an unnecessarily high level which otherwise could have been addressed via foreign direct investment. The important implication of all that was that if the currency were allowed to float, then the mechanism of its appreciation and depreciation would ultimately bring a balance between exports and imports. This is, of course, the familiar adjustment process known as the J-curve effect, according to which devaluation would initially adversely affect the current account deficit, but after that it would improve the situation continuously (Cordon, 1981). Any remaining trade imbalance could be addressed via directly inviting foreign direct investment. 　　Accordingly, country after country joined the currency float fashion and the removal of financial controls. Also laws relating to takeover and merger activities were relaxed in anticipation that the threat of a takeover may improve the performance of those otherwise not performing as expected. In other words, the external sector of the financial system also had to be liberalized. Internal and external liberalization of the financial sector was undertaken with the expectation that 　　this would bring efficiency to this sector. This in turn would improve the growth performance of those countries, and in the process it would open up the opportunity for financial capital to move freely from one country to another. Trie speed of that movement was further enhanced by the advancement in information technology. The combination of these latter two developments has given the impression that the financial markets are now perhaps truly globalized.