New International Financial Architecture
THE NEW INTERNATIONAL FINANCIAL ARCHITECTURE: WHY THE NEW BUILDING?
by Susanne Soederberg
In pursuing its competitiveness strategy the United States gained more influence over the international monetary and financial arrangements in the global economy by being able to freely decide the price of the world’s trading and reserve currency .
As Peter Gowan notes, although the DWSR did involve other major currencies (especially the yen and Deutsche mark) and other principle financial centres other than Wall Street and its London satellite, the Dollar-Wall Street nexus has proven to be the dominant centre. The significance of the DWSR lies in the fact that the United States…
“does not face the same balance of payments constraints that other countries face. It can spend far more abroad than it earns there. Thus, it can set up expensive military bases without a foreign exchange constraint; its transnational corporations can buy up other companies abroad or engage in other forms of foreign direct investment without a payments constraint; its money-capitalists can send out large flows of funds into portfolio investments (buying securities)…”
Paper available by google search on a pdf file — not linkable here.
Al:
I had to read this useful but not so user-friendly article twice to begin to get the sense of it. Be prepared for a lot of acronyms: NIFA, DWSR, FSF, G20, IFA, BWS, IOSCO, SAP, IFI, IMF-3 and FDI were all new to me.
Apparently written in 2001, the article now seems a bit dated. A discussion of NIFA as shoring up of the post-Breton Woods status quo of dollar dominance and global free capital movement doesn’t seem that cricital to me at this point.
I’m more interested in understanding the consequences of Bush II to the “Washington consensus” and the “new constitutionalism,” e.g., Wolfowitz at the World Bank and Bolton at the UN. Haven’t we arrived at the point where “coercion” has become not only counter productive, but just plain stupid? Add to that what looks like the coming of a time of major economic troubles, especially within the US, and I rather expect changes just as fundamental as those post-LBJ and post-Breton Woods that gave rise to the “DWSR.” What will they be? Are we headed for some kind of post-globalization, possibly even a post-dollar dominance era? What will that mean for politics?
20 April 2005, 9:18 amSam:
Al asks: “Haven’t we arrived at the point where ‘coercion’ has become not only counter productive, but just plain stupid?”
it’s all the more amazing, then, to consider the ironclad solidarity of the political elites behind most of the “coercive” policies of George W. Bush… you’d expect the elite consensus to crumble at some point, but no…
23 July 2005, 4:50 pm