The ongoing weakening of the international financial system

P. Gray
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P. Gray: Rutgers University

Banca Nazionale del Lavoro Quarterly Review, 1996, vol. 49, issue 197, 165-186

Abstract: A hegemon-by-committee, or a group of nations playing the role of a dominant financial power, is necessary for the international financial system to withstand crises arising from drastic shifts of funds among national currencies, accompanied by large movements of exchange rates. These wide fluctuations in exchange rates and subsequent financial transactions can trigger a collapse of prices in dollar-denominated financial assets in US financial markets, thus undermining the global economy. With no single nation apparently capable of playing the hegemon, international cooperation is imperative. An important theme of the paper is that allocative efficiency may not be compatible with adequate financial stability efficiency.

Keywords: Administration of General Economic Programs; Intnl Economic Policy; Exchange rates; global instability (search for similar items in EconPapers)
JEL-codes: F31 G28 (search for similar items in EconPapers)
Date: 1996
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