Dissonance in Global Financial Law

Revisiting the concept of transgovernmentalism, originally developed by Robert Keohane and Joseph Nye, can shed considerable light on the nature of interstate cooperation in contemporary global financial governance. Transgovernmentalism highlights how certain technocratic policy communities, composed of finance ministries, central banks, and regulators, dominate the global financial architecture. It also provides insights into the political and social basis of these actors' interactions and deliberations. Most importantly, renovating the concept of brings the participatory deficits in the current global financial architecture into sharp focus and points us in the direction of a workable reform agenda that would expand inclusion and participation. This article advocates basing future reform on efforts to achieve a closer realization of the principle of Unfortunately, transgovernmentalism is incompatible with deliberative equality, meaning that it is precisely the transgovernmental characteristics of the current global financial architecture that have to be challenged and overturned if we are to arrive at anything approximating deliberative equality. KEYWORDS: global financial architecture, transgovernmental politics, G7, G-20, deliberation. ********** Over thirty years ago, Robert Keohane and Joseph Nye published a seminal article in the journal World Politics that outlined the concept of transgovernmental relations. (1) In the intervening period, political scientists have rarely applied the concept in empirical research, fewer still sought to revise it for the contemporary era. In this article, I make the argument that a renovated version of the concept of can make a significant contribution to our understanding of the political dynamics of the current global financial architecture (GFA). (2) As a concept, not only reveals much about the nature of interstate cooperation in contemporary global financial governance, but also brings the participatory deficits in the current GFA into sharp focus and points in the direction of a modest, workable reform agenda that would increase inclusion and participation. The review of the GFA undertaken after the Asian financial crisis involved three distinct trends. There was both a partial privatization of financial governance evident in the creation of twelve codes and standards that were designed to enhance market scrutiny of national policies and practices (3) and a limited shift away from the club model of diplomacy evident in the creation of the G-20, which challenged the monopoly of leading developed countries. Most significantly, the architectural exercise consolidated and deepened the transgovemmental characteristics of the GFA. The transgovernmental nature of the GFA restricts participation in key deliberative spaces to a limited number of regulators and central state agencies (almost exclusively finance ministries, central banks, and specialist regulatory agencies), which dominate and control the deliberations that determine the terms and content of global financial governance, resulting in a narrow, technocratic, closed insider policy process that remains largely impenetrable to a wider range of concerned societal interests. While there is some evidence of a shift in global governance arrangements toward a more polycentric form of complex multilateralism in which various civil society groupings, nonstate actors, and developing countries participate alongside more traditional advanced capitalist state bureaucracies in the form of trisectoral networks, (4) I argue in this article that the principal defect of the global financial architecture is that it remains insufficiently pluralist and that this is a direct result of its overriding transgovernmental character. I begin with a brief discussion of the growing significance of the concept of deliberation for the study of global governance, including some consideration of the importance of the issues of participation and representation in the act of deliberation. …

Methods. The methodological basis of the research is a system of general scientific and specific methods, in particular, the method of logical analysis made it possible to build the logic of the research; the method of comparison – to assess the key parameters of the global financial architecture; analysis and synthesis – to generalize research results, the deduction method – to single out individual factors affecting the state of the modern world financial architecture. The graphic method made it possible to visualize the obtained research results. Results. The article is devoted to defining the trends of the world financial architecture. The structure of the modern world financial architecture, which includes global, regional and national levels, has been formed. The main problems of the global financial system have been identified, such as: the emergence of «bubbles» in some of its segments; increased volatility of international capital flows; volatility of exchange rates, etc. A list of global indicators influencing the global financial architecture has been determined. The need to reform the world financial architecture as a result of the global economic crisis of 2008–2009 is substantiated. The main directions of reforming the world financial architecture are identified: global financial management; banking sector; over-the-counter derivatives market and fight against offshore jurisdictions. New risks were identified, which caused the need to develop new mechanisms for reforming the global financial architecture at the end of 2018 – the beginning of 2020, the threat of new crises in countries with markets based on the principle of the «contagion effect». The impact of the pandemic on the world stock market was studied through the dynamics of the FTSE, Dow Jones Industrial Average and Nikkei indices. The article substantiates that an important aspect of the current state of the global financial architecture is the wide implementation of FinTech innovations. It has been proven that the war situation in Ukraine definitely affects the state of the financial architecture due to the strengthening of global inflation and the tightening of monetary policy by Ukraine's partner countries. Novelty. The originality and value of the research lies in the formation of a methodology for diagnosing the state of the world financial architecture. The main trends in the functioning of the world financial architecture have been determined. The importance of FinTech for achieving progressive changes in the global financial system and the development of the global financial architecture is determined. Practical value. There is substantiated the practical role of certain factors, which made it possible to determine the trends of the current state of the world financial architecture, which will become an analytical basis for assessing the degree of development of the financial architecture of the countries of the world.

Reducing Systemic Risk: The Role of Money Market Mutual Funds as Substitutes for Federally Insured Bank Deposits

Global financial architecture: Role of influential groups and controlling institutions

As is clear from the large number of financial crises that the world has experienced since the 1980s, the current international financial governance arrangements have not always functioned effectively. In fact, at least since the 1997 Asian financial crisis, there has been general agreement that the existing arrangements for international financial governance, often referred to as the “global financial architecture” needs to be reformed. This general agreement led to the formation of the G20 and, in 1999 to the creation of the Financial Stability Forum (FSF) in which financial regulators from the G7 countries and key international organizations meet to share information and coordinate their activities. However, over time, the attention paid to this topic has been inversely proportional to the wellbeing of the global financial system. Consequently, during most of the early years of the millennium, the topic was not high on the international agenda. This began to change as signs that the global political economy could be running into problems began to appear. There was an agreement at the 2006 International Monetary Fund (IMF or Fund) Annual Meeting to reform IMF governance. In 2008, the World Bank Group (the World Bank or the Bank) agreed to create a new seat for an additional African Director, although this has not been implemented. More recently the leadership in the Fund and the Bank each appointed a high level commission to study their governance - the Manuel Committee was appointed by the IMF and the Zedillo Commission by the World Bank. In addition, the G20 summits in 2008 and 2009 devoted considerable attention to reforming key financial governance institutions, in particular the IMF and the FSF, now reconstituted as the Financial Stability Board. These developments suggest that there could be changes in the international financial architecture in the short- to medium-term. This article assesses the actual significance of the reforms that have either recently been implemented or that are under consideration and the potential they might create for further international financial governance reform. In undertaking this evaluation, the article seeks to answer five questions: What standards should we use in assessing the adequacy of any set of arrangements for international financial governance? What are the problems with the current international financial architecture? What, in fact, has been achieved in terms of reforming international financial governance? What more can be achieved in the short run? And what more needs to be achieved, over the medium to long term, if we are to eventually have an effectively functioning international financial architecture?

The Global Fund: replenishment and future-proofing

The bitter winds of financial crisis have once again swept global markets, this time beginning at the core of the system, Wall Street. Whether blame be assigned to private greed, public policy lapses, or both, vast sums of public money and shareholder capital have been wiped out in the otherwise noble cause of preventing systemic breakdown. Vulnerable citizens once more count the costs to the real economy. As massive liquidity has been made available to private financial institutions on exceptionally permissive terms, it has been difficult not to notice the striking contrast with the management of earlier crises based in the emerging markets. When they were in the dock, the emphasis was on the conditionality of the terms of rescue; with Wall Street and the City in trouble, the terms of rescue have been much more open-ended. As growing uncertainty combined with these apparent double standards, the crisis has reopened debate on the global financial architecture, public policy and regulation. Global financial integration and the governance of the global monetary and financial system stand at a crossroads after over thirty years of market-oriented cross-border integration and development preceded and indeed exacerbated a financial crisis on a scale not seen since the 1930s. This ongoing process of integration, regularly punctuated by crises and instability, raises analytical, normative and policy dilemmas which challenge our current understanding of financial and monetary governance. Many scholars argue that higher levels of economic integration require greater degrees of regional and global governance (e.g. Cerny 1995; Zurn 2004). Yet the relationships between economic integration, competitive market dynamics, international political cooperation and potentially new patterns of multilevel governance remain unclear as policy-makers face the difficult task of reform while still coping with the consequences of crisis. While the capacity of the current global financial architecture to cope with monetary and financial challenges is once again in serious doubt, the future direction of reform remains uncertain. To complicate matters further, not only the capacity and efficiency, but also the legitimacy

Purpose – The paper aims to offer a new perspective casting original light on the foundational socio‐scientific argumentation premised on the application of the epistemology of unity of knowledge across contrasting shades of reasoning, to the problem of religion, science and society. Kantian epistemological reasoning is questioned within this argumentation. The specific case of money, finance and real economy is treated in the context of the epistemology of unity of knowledge contra Kantian problem of heteronomy.Design/methodology/approach – The comparative study of received literature in the history of epistemological thinking is applied to the issue of universality and uniqueness of theory and its application in the learning dynamics between organically complementary relations, called circular causation, to the ethical interdependence between money, finance and the real economy. The goal is to attain social and economic sustainability.Findings – A new epistemological outlook in occidental sciences is ne...

This article evaluates the prospects for meaningful reform of the global financial architecture. It begins by looking at the most significant problems with the current architecture. Thereafter it classifies the current reform efforts into three areas -- reforms that in fact have been implemented, reforms that have been proposed but not yet implemented, and reforms that are only under discussion. The paper then evaluates the adequacy of these reform efforts and makes some brief proposals for future reform efforts.

The article addresses the question whether the New Development Bank (NDB) will promote the role of the BRICS countriesin the global financial architecture and foster their development. It begins by comparing the key multilateral developmentbanks (World Bank, Asian Development Bank, African Development Bank and Inter-American Development Bank,European Bank for Reconstruction and Development) and national development banks of the BRICS countries with thenewly established institution. The NDB’s purpose is to mobilize resources for infrastructure and sustainable developmentprojects in the member countries. This purpose, as author concludes on the base of the analysis, partly duplicates the workof the existing institutions. However, the NDB could add to the functions of the existing institutions and become a significantdevelopment bank for its members. The best way to achieve this significance is to implement multilateral projects in the areasmentioned above. The article also examines the current role of the BRICS countries in the global financial architecture andthe potential for an increased role, brought by the establishment of the BRICS bank. The founding countries of the NDB willjointly determine the volume and directions of its financial aid. In addition, in contrast to the Bretton Woods institutions,the BRICS countries can change the rules of the development financial aid, particularly the conditions and system formonitoring results. The article concludes that the BRICS countries have created a possible way to change the current systemof development finance and therefore to increase the role of the BRICS countries in the global financial architecture.

Purpose. The purpose of the article is to reveal the specifics of the activities of global financial institutions as legal entities under international public law, important components of the global financial architecture and agents of unshadowing of the world economy using the sample of the Financial Action Task Force (FATF). The postulate of the work defines the leading importance of the institutional mechanism of unshadowing of the global economy for the development and implementation by countries of the unshadowing toolkit in a combination of economic and legal components as a factor of sustainable development. Results. It was found that the continued expansion of the shadow segment of the global economy actualizes the expediency of researching patterns and features of the processes that cause and accompany it. The global financial architecture is undergoing transformations adapting to the challenges of the shadowing of the world economy, including 1) the implementation of shadow economic transactions by business entities, 2) the deformation of the competitive environment and capitalist market institutions, 3) the distortion of business activity models, 4) the degradation of people's economic behaviour, as consumers and employees, and 5) aggravation of the global environmental problem. The classification of subjects of the unshadowing of the world financial sphere, which play a key role in its architecture, including their division by types 1) international universal organizations, 2) international financial organizations and 3) international specialized institutions, has been carried out. The structure-forming role of normative documents, which determine both the goal-setting and general quantitative characteristics of the environment of financial institutions, as well as the peculiarities of the development and implementation of activities for the unshadowing of economic relations and systems, has been revealed. All countries are only on the way towards effective economic models and sound global financial ecosystem. Scientific novelty. A new model of the institutional matrix of the global financial ecosystem is proposed, including the green economy and sustainable development components. The peculiarities of FATF in the global financial architecture and processes of unshadowing of business activities are revealed. Practical value. The obtained results can be used in the improvement of the national policy of countering the shadowing of business activities, reducing the environmental problem, as well as increasing the effectiveness of international economic relations in this area.

Comment on “Changing International Financial Architecture: Growing Chinese Influence?”

Some five years ago, Robert Rubin, the erstwhile US Treasury Secretary made a speech calling for measures to “strengthen the international financial architecture.” The metaphor he used was adopted by the academic and policy-making communities and has since survived in the academic writings on this issue as a part of accepted jargon. But it was inapt because global financial system was not quite an architect’s blueprint. If anything, it is an excellent example of what the Japanese call kaizen, meaning an incrementally evolving phenomenon, improving marginally but continuously, in stages, with time. Pressures from market participants and those from emerging market and Group of 7 (G-7) governments were responsible for this continual, marginal improvement in the global financial architecture.

The monograph summarizes the conceptual foundations of the formation of a new global financial architecture. The institutional and functional contradictions of the modern world financial architecture and its regional features are systematized. Recommendations have been developed to strengthen Russia's position in the conditions of increasing confrontation between the leading centers of the world economy and proposals for the implementation of promising areas of Russia's participation in the emerging new global financial architecture. It is intended for researchers, teachers, postgraduates, students specializing in the study of international economic relations, as well as a wide range of readers interested in modern problems of the development of the world economy and world finance in the context of the transformation of the global socio-economic paradigm.

The article analyzes the changes that have occurred in the global financial system in the XXI century. Moreover, the study covers the global financial system in its integrity as a combination of different financial markets and international financial institutions. Based on the analysis of statistical data, it is shown that the global economic and financial crisis of 2007-2009 led to a reduction in international capital flows, a change in their structure (towards an increase in the share of foreign direct investment) and a decrease in cross-border financial activity. In the post-crisis period, government debt and equity markets developed relatively more dynamically, while banking activity was restrained, including as a result of intersectoral arbitrage caused by international financial system reforms. The process of reforming the global financial system has reduced risks in certain segments of the global financial market (banking services markets, over-the-counter derivatives), but retained relatively less regulated segments that may be subject to risks of financial shocks. Changes in the global financial architecture have led to the formal involvement of emerging markets in the process of reforming the global financial system (through the Group of 20) and to some strengthening of the supranational component of regulation. However, in general, the interests of countries with emerging markets both in the reform processes and in the construction of the global financial architecture are not fully taken into account.