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Edited by Andrew W. Mullineux and Victor Murinde
Chapter 25: Reforming the Privatized International Monetary and Financial Architecture
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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