Handbooks of Research on International Political Economy series
Edited by Thomas Oatley and W. Kindred Winecoff
Chapter 22: In lieu of an anchor: the Fund and its surveillance function
The economic historian Barry Eichengreen writes that the 'Classical Gold Standard' was a 'historically specific institution'; or rather that 'It was a socially constructed institution whose viability hinged on the context in which it operated' (Eichengreen 2008). Today's international monetary system (IMS) is no different: its complexity, incongruence, and often incoherent nature is a reflection of the constantly evolving political and economic order that this system is embedded within. The raison d'Ítre of the International Monetary Fund (IMF) is to cut through this complexity and promote the smooth functioning of the IMS. In the absence of a concrete set of agreed-upon 'rules of the game' to govern international monetary affairs, the Fund relies heavily on its surveillance function. In the post-Bretton Woods system, the importance of (and difficulty in exercising) effective surveillance has grown in line with the rapid globalization of capital. In comparison, despite its many shortcomings, the Bretton Woods system was at the very least rules-based and its creation was the result of series of negotiated (albeit imperfect and incomplete) settlements between American and British representatives. By contrast, the current system has been often referred to as an international monetary non-system (Truman 2012), lacking a common nominal anchor, an official means of managing global liquidity, an adequate set of agreed-upon rights and responsibilities, or a market- or policy-based adjustment mechanism between deficit and surplus nations.
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