Global financial architecture: Past and present arguments, advice, action

Ashima Goyal

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: In the context of the formation of G-20, the paper points out the absence of reform in the global financial architecture (GFA) after the East Asian crisis, and assesses factors that can improve the chances of real reform this time. A factual assessment of various causes advanced for the global crisis, puts the main responsibility on lax regulation. Liquidity created by current account imbalances was tiny compared to endogenous amplification of liquidity in the financial sector. Emerging markets needed reserves as self-insurance in the face of volatile cross border flows. Even so global imbalances increase risk. The paper summarizes the Chimerica debate and the blocks that have stalled progress in resolving the issue. It argues that symmetric and balanced reform, at individual country and international level, is required to remove the blocks. Deeper governance reforms will make it feasible. Potential contributions of the G-20 are outlined. It is argued that India is a useful example of flexible but managed exchange rates that allowed market deepening and export growth.

Keywords: Global Financial architecture; Crisis; G-20; Imbalances; Over-saving (search for similar items in EconPapers)
JEL-codes: F02 F32 F33 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2009-06
New Economics Papers: this item is included in nep-cwa, nep-fmk and nep-sea
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Global Financial Architecture: past and present arguments, advice, action (2009)
Working Paper: Global Financial Architecture: Past and Present Arguments, Advice, Action (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2009-004

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