138 Journal of International Studies © Foundation of International Studies, 2014 © CSR, 2014 Scientific Papers Ireneusz Miciula University of Szczecin Poland irekmic@wp.pl Abstract. e globalisation process has provided us with the possibility of exchange and competition growth, and thus, has brought about the issue of economic (business) creation in the context of the new foreign exchange risk mitigation instruments. e author presents the division and percentage proportion of innovative risk manage- ment instruments used in practice in the Polish economic reality, and compares it to foreign markets (the USA and Germany). Moreover, an attempt is made to define what financial innovations are and analyse the available alternatives and instruments provided by the currency market and used to manage a company on the global market. Finally, chances and threats presented by financial innovations are also demonstrated. Key words: financial innovations, currency market, globalisation, economic creation. JEL Classification: B4, C5, F4, G1. INTRODUCTION A market is a set of planned and implemented purchase/sale transactions and the conditions which govern how they are offered and carried out. In other words, a market is an ongoing economic process. As a part of this process, a buyer and a seller decide what they want to sell or buy and under what conditions (Czekaj 2008, p. 3). From the perspective of the object of trade, one can distinguish four basic market types: product (goods and services) market, property market, labour market and financial market. Financial mar- kets are those where purchase/sale transactions of various forms of money capital are conducted on the basis of financial instruments. A financial instrument is a contract concluded between two parties defining the financial interdependence which they remain in (Jajuga 2009, p.7). e objects of trade on financial markets are financial instruments, i.e. financial assets (claims) that some economic entities have towards other. e modern financial markets can be divided into money, capi- tal, currency (foreign exchange) and derivatives market. e currency market comprises of all the currency exchange transactions, i.e. purchase/sale transactions of one currency for another (Bennet 2000, p. 49). e object of every currency transaction (whether it is currency sale or purchase) includes at least two curren- cies. A conversion rate (exchange rate) is created on this market. It defines the value of one currency in terms of another currency. e rules of currency market functioning are identical to those governing any other market (e.g. commodity market). What is traded here are currencies, or in other words, financial instru- Received: February, 2015 1st Revision: April, 2015 Accepted: May, 2015 DOI: 10.14254/2071- 8330.2015/8-1/12 Financial innovations on the currency market as new instruments to risk management Ireneusz Miciuła “Financial innovations on the currency market as new instruments to risk management”, Journal of International Studies, Vol. 8, No 1, 2015, pp. 138-149. DOI: 10.14254/2071-8330.2015/8-1/12