European Monetary Policy and Future of Global Economic Governance

Abstract

In the wake of the global financial crisis and the onset of the Euro zone sovereign debt crisis, existing mechanisms of global economic governance have faced strong theoretical, political, and normative challenges from a wide range of actors operating across multiple spheres in the global political economy. Over the last several decades, the sands of global economic governance have been shifting. Emerging markets and developing countries (EMDCs) have experienced unprecedented growth, and the structure of the global economy has undergone a process of transformation. The global financial crisis not only amplified this process, it also produced new challenges and difficulties. As the effects of the crisis linger, it is evident that the world economic dynamic has evolved. It is also clear that a commensurate shift in the paradigms of global governance has yet to take place. For this reason, questions regarding the future role of the International Monetary Fund (IMF), Europe, and EMDCs are more important than ever. This paper aims to discuss the monetary policy and future of global economic governance (with focus on contribution of the IMF) and the associated challenges and opportunities for Europe. It touches upon broad range of topics and issue-areas, including “importance of IMF quota reform” and “origin of global financial safety net”, with emphasis for emerging economies and developing countries. Data used in the paper are ‘secondary’ (collected from books, government publications, and Internet sources) and they have been analyzed using “descriptive research method”. The paper concludes that there are a number of central issues related to the evolution of global economic governance, the stability of the financial architecture, the role and reform of the IMF, and the requirements of multilateralism that balances effectiveness, legitimacy and disparate interests. There is need to move the discussion forward in wider circles, in the hope of coming closer to a balanced resolution to longstanding challenges.