Publisher's Note This study of international capital movements looks at their historical role in the financing of trade and their dramatically increased role in the world economy in recent years. It examines the current economic theory and the policy implications of these changes. Beginning with an analysis of the balance of payments, the author goes on to discuss international short-term and long-term capital movements, both historically and with reference to current events. A further chapter deals with financial deregulation and the progression during the past few years toward the integration of international capital markets. The author looks forward to two possible futures for international finance: a gradual federalization of macro-economic behavior on a world basis, or move towards self-reliance and autarky.