Reforming the International Financial System for Development
The 1944 Bretton Woods conference created new institutions for
international economic governance. Though flawed, the system led to
a golden age in postwar reconstruction, sustained economic growth,
job creation, and postcolonial development. Yet financial
liberalization since the 1970s has involved deregulation and
globalization, which have exacerbated instability, rather than
sustained growth. In addition, the failure of Bretton Woods to
provide a reserve currency enabled the dollar to fill the void,
which has contributed to periodic, massive U.S. trade deficits.
Our latest global financial crisis, in which all these
weaknesses played a part, underscores how urgently we must reform
the international financial system. Prepared for the G24 research
program, a consortium of developing countries focused on financial
issues, this volume argues that such reforms must be developmental.
Chapters review historical trends in global liquidity, financial
flows to emerging markets, and the food crisis, identifying the
systemic flaws that contributed to the recent downturn. They
challenge the effectiveness of recent policy and suggest criteria
for regulatory reform, keeping in mind the different circumstances,
capacities, and capabilities of various economies. Essays follow
ongoing revisions in international banking standards, the improved
management of international capital flows, the critical role of the
World Trade Organization in liberalizing and globalizing financial
services, and the need for international tax cooperation. They also
propose new global banking and reserve currency arrangements.
Subjects: Business, Economics, Political Science, Sociology
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