Edited by Thomas Oatley and W. Kindred Winecoff
Chapter 1: The political economy of the international monetary and financial systems
The 2008 global financial crisis and the sovereign debt crises that ravaged the European Union between 2010 and 2013 have thrust the international monetary and financial systems to the center of global political economy. The international monetary and financial systems provide the infrastructure for the global economy. The international monetary system - a system for exchanging national currencies at low cost at relatively stable rates and a balance-of-payments adjustment process - makes international trade possible. The international financial system - a network of private and public financial institutions - intermediates transactions between savers and borrowers who reside in different countries. These transactions provide short-term credit for international trade and longer-term finance for cross-border investment. Derivatives markets enable participants in the global economy to manage risk arising from transacting in multiple jurisdictions with multiple national currencies. Without these essential structures, there would be very little international trade and even less cross-border investment. In the decade prior to the 2008 global financial crisis, international political economy (IPE) pushed the study of global money, finance and financial crises onto the back burner as scholars focused on seemingly more pressing research programs. One post-crisis review of pre-crisis scholarship, for instance, noted that in the preceding decade the field's top journals published only a handful of articles devoted to international finance (Cohen 2009, 437).
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