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 worldâ€™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.