Derivatives and the real economy

The paper describes the development of the derivatives market and compares it with the development of the real economy. Based on official data the paper describes how the derivatives market has significantly increased its volume of trading, mainly after the abolishment of the Glass-Steagal Act. The growing volume of the derivatives market also significantly contributed to the global financial crisis. This paper also compares the growth of the global nominal and real gross domestic product with the pace of growth of the overall derivatives market, but mainly the over-the-counter market. Based on preliminary findings, the paper came to the conclusion that it is critical to implement all the requisite measures in order to eliminate non-transparent transactions with certain derivatives products in order to put the global economy on a sustainable, solid and balanced economic growth path.