Limits to the BRICS’ challenge: credit rating reform and institutional innovation in global finance

Eric Helleiner and Hongying Wang

Review of International Political Economy, 2018, vol. 25, issue 5, 573-595

Abstract: Although many scholars have analyzed the BRICS’ creation of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), less attention has been paid to other – less successful – BRICS efforts to challenge the dominant global financial order through institutional innovation. This paper examines the case of BRICS’ discussions to create their own credit rating agency (CrRA) which began in 2012 around the same time as the initiatives to establish the NDB and CRA. These discussions have been driven by discontent with US-based CrRAs which act as key authorities in global finance, but BRICS institutional innovation has been slower to emerge than in the NDB and CRA cases because the BRICS have shared less of a common social purpose on this issue. Even if a BRICS CrRA was created, this institution would be very unlikely to challenge the dominant order any time soon because of the enduring structural power of US and its CrRAs in this sector. The case shows how a wider case selection than the NDB and CRA reveals that the BRICS’ capacity to transform the global financial order through collective institutional innovation is dependent on specific conditions: the strength of their common social purpose and the degree of the structural power of established authorities.

Date: 2018
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DOI: 10.1080/09692290.2018.1490330

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