The International Law and Politics of the Financial and Monetary System
Chapter 17: Foundations of a minimum economic order
In this chapter we analyze the minimum economic order including bilateral swap agreements and regional financial arrangements. Regional financial arrangements can be tapped during a crisis especially because they carry less stigma than the IMF. However, their lending capacity remains minimal and conditional. Developing states have complained about the lack of a global safety net. The sovereign and core states are, however, unwilling to establish institutions that would assume the function of lender of last resort for all states. As a result, countries that cannot print their way out of a crisis remain vulnerable. The lack of incentives of core states to establish a robust economic order that benefits the majority is the reason for the absence of such an order. There is no indication that these incentives may be changing since economic sovereignty has remained concentrated.
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