Table of Contents

Handbook of International Banking

Handbook of International Banking

Elgar original reference

Edited by Andrew W. Mullineux and Victor Murinde

The Handbook of International Banking provides a clearly accessible source of reference material, covering the main developments that reveal how the internationalization and globalization of banking have developed over recent decades to the present, and analyses the creation of a new global financial architecture.

Chapter 25: Reforming the Privatized International Monetary and Financial Architecture

Jane D’Arista

Subjects: economics and finance, financial economics and regulation, money and banking


25. Reforming the privatized international monetary and financial architecture* Jane D’Arista 1 INTRODUCTION Since the events of 1997, proposals for reforming the financial system have regularly punctuated public discussions of the global economy. But so far, neither these discussions nor a series of official multilateral initiatives have produced even modest changes in global finance or the monetary infrastructure on which it rides. During 1999, the momentum for reform has dissipated, despite the persistence of powerfully destabilizing features in the global system and the likelihood of future crises. The most worrisome feature is, in many respects, the most deeply ingrained. After the worldwide removal of regulatory constraints, market forces have assumed a dominant role in the international monetary and payments system. With the ascendancy of liberalization as a governing paradigm for financial enterprise, the role of the public sector has been cut down if not cut out. As a result, what the public sector alone can do – manage liquidity, launch countercyclical initiatives and respond to crises at the international level – has become far less effective than in the past. Financial liberalization also poses a substantial threat to the sovereignty of nations, particularly those with emerging economies which stand most exposed to the punishing judgements of unrestrained market forces. Ultimately, remedying these problems will require the public sector to reconstitute its powers to promote stability and growth in the global economy while enhancing the rights of individual countries to shape their own economic, social and political outcomes. The following three...

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