Global Monetary Order Research Articles

Currency Hegemony as a Tool of US Global Dominance

Subject. The formation of new centers of global influence predetermines corresponding changes in the global balance of power. At the same time, the lack of real reforms of the global monetary system allows the United States to continue to set the rules of the game in the global economy, despite its increasing crisis potential. In this regard, there is a need to identify the driving forces capable of producing constructive changes in the global monetary order. Objective. A summary of the practice of using the US dollar to suppress global competition and maintain American superiority in international economic relations. Results. The control of the international monetary sphere by the country — hegemon of the world economy can be traced at all stages of the development of international economic relations (IER). Currently, the hegemonic country’s self-interest from issuing international liquidity, with non-resistance to such a policy on the part of all other IER participants, hinders the development of effective anti-crisis measures and worsens the general condition of the world economy. Scattered attempts to overcome the failures of global currency regulation at the local level (including through the use of digital technologies) seem to be ineffective, since they are not systemic in nature. Conclusions. A qualitative reform of the global monetary system is impossible without combining the efforts of the world’s largest economies to counter the destructive policies of the country that issues key international liquidity. Otherwise, the costs of financial crises become an insurmountable obstacle to the global economy entering a path of sustainable development.

Shaping and Reshaping the Global Monetary Order during the Interwar Period and Beyond: Local Actors in-between the International Institutions ed. by Catherine P. Brégianni and Roser Cussó (review)

Shaping and Reshaping the Global Monetary Order during the Interwar Period and Beyond: Local Actors in-between the International Institutions ed. by Catherine P. Brégianni and Roser Cussó (review)

The Renminbis Ascent: Challenges, Opportunities, and Implications for the Global Monetary System

The Renminbis (RMB) journey towards international prominence encapsulates China's economic metamorphosis and the evolving dynamics of the global monetary system. This paper delves into the multifaceted trajectory of the RMB, highlighting the challenges and opportunities it faces in its quest for global acceptance. It provides an in-depth analysis of the implications of the US-China trade war and the global pandemic on the RMBs internationalization. The paper also underscores the transformative potential of strategic initiatives such as China's Belt and Road Initiative (BRI) and the pioneering Digital Yuan. Through a nuanced exploration of these themes, this study offers insights into the RMB's current status and its prospective role in the global monetary order. As countries grapple with changing trade dependencies and the digital revolution in finance, the RMB emerges not just as a participant but as a potential leader in reshaping the contours of international finance.

UNDER PRESSURE OF DIGITALIZATION AND GEOPOLITICAL CHALLENGES: INTERNATIONALIZATION OF CURRENCIES AND THEIR RESERVE STATUS

Digitalization and geopolitical challenges are increasingly being viewed as preconditions for the transformation of global monetary order towards stronger multipolarity. However, according to traditional approaches, current status quo is more viable because of the technological neutrality of reserve currency status. At the same time, alternative approaches point to technological opportunities for the internationalization of the renminbi, which would heighten the competition between the main currencies and hurt the U.S. dollar. Critical overview of new theoretical approaches indicates that putting retail CBDC at the heart of changes in global monetary order is too categorical. It is likely that digitalization will affect the technology of international transactions and thus enhance competition between leading currencies in how they support payment services for clients. Meanwhile, CBDC design issues and cooperation between central banks in transborder digital payments create new trade-offs that support the more traditional approach on global monetary competition. Recent demand trends of reserve assets also contribute to stronger rigidity of the international currency system.

RMB transnationalization and the infrastructural power of international financial centres

The internationalization of the renminbi (RMB) raises important questions concerning dynamics of transformation within the post-crisis global monetary order. International political economists have predominantly analysed the currency’s cross-border evolution as a consequence of China’s macroeconomic conditions, domestic politics, and currency statecraft within a broader framework of international monetary hierarchy. In this article, we draw upon insights from financial geography to rethink the rise of the RMB as a process of transnational market-making involving actors and political agency across distinctive scales. We develop a multi-scalar framework that illuminates the distinctive agency of London and Hong Kong in this process, conceptualizing it as a form of subnational infrastructural power that facilitates financial market-making in concert with (and despite) dynamics of interstate geopolitics. This goes some way in remedying the scalar deficiency of existing theories of political economy of international money, as well as integrating considerations of power and political agency into financial geography perspectives. Empirically, we trace how the unique development of London’s offshore RMB market reflects this interplay between private financial actors, municipal-level authorities, and national political priorities. Finally, we discuss how IFC-led market-making relates to system-level dynamics by both facilitating ‘tipping points’ in global monetary change, as well as diluting national monetary power.

Global Monetary Order and the Liberal Order Debate

AbstractThe recent “liberal international order” (LIO) debate has been vague about the institutions and issue areas that constitute the order. This is likely driven by competing views of “liberal” and, perhaps more importantly, by security scholars dominating the debate. From the perspective of scholars who explore the elements of the global monetary order (reserve currencies, international financial institutions, and central banks), the picture is different. Where security scholars point to a decline in US influence, scholars of global monetary politics see continued US dominance. Moreover, monetary prominence has been a precondition for the viability of great power projects of order building more generally. This symposium offers such a counter narrative. While the security challenges are real, the crises of the last decade have actually reinforced the centrality of the US dollar and American financial power in the international system.

Ten years after: capital flows and the global monetary order*

Cross-border bank flows, which had surged in the run-up to the global financial crisis (GFC), shrank significantly after the GFC. According to our findings, this development did not point to financial deglobalization, as was widely expected. Instead, it reflected a cross-border deleveraging of (core) European banks seeking to restore their capital positions. The GFC triggered regulatory reforms that were remarkable, especially with regard to the banking system. Nevertheless, the opportunity to fundamentally overhaul the regulatory regime in general and the global monetary order in particular was not seized. While regulatory reform has progressed incrementally during the last decade, the partial retreat of the USA from multilateralism has brought this issue back onto the table.

Ascenso y declive de Estados Unidos en la hegemonía mundial

El presente artículo integra un comparativo de dos épocas distintas en el orden económico mundial: la crisis de hegemonía inglesa de fines del siglo XIX junto con la consolidación de la hegemonía estadounidense al final de la Segunda Guerra Mundial, y el proceso actual de crisis de la hegemonía estadounidense a partir de 2001 a la fecha. El planteamiento parte de una visión estructural de la economía en la que el sistema productivo mundial se transforma a lo largo de distintas etapas históricas y junto con otros elementos como el orden monetario mundial y el liderazgo político, institucional y militar, transforma el orden económico y la hegemonía.

The international political economy of money, macro-money theories and methods

ABSTRACTThe 2008 financial crisis exposed the fragility of advanced economies to financial caprice and the centrality of the United States in the global monetary order. Understanding the power structures behind global monetary orders, their distributional effects, as well as the systemic consequences associated with practices within domestic financial systems, particularly within financial centres, remains a priority. In a recent commentary, Cohen argues that the field is fragmented and that excessive attention to social scientific method is to blame. I agree with Cohen that the field of international political economy (IPE) of money is fragmented but I disagree that social scientific method is the cause. The fragmentation, and slow progress in the IPE of money, to which Cohen refers, is rather attributable to a lack of social scientific method, resulting in conceptual and empirical ambiguity, and unclear standards. Finally, I outline how social science methods could produce the kind of systemic analysis Cohen is calling for, ‘macro-money theories’, the flip side of the ‘micro-money theories’ embodied by open economy politics.

Polanyi, Minsky y el problema del Orden Monetario Global: de las altas finanzas a los megabancos

<p>Este artículo examina las ideas y pensamientos de K. Polanyi y H. Minsky en torno a las altas finanzas. Como se argumenta, Polanyi asume una visión historica benigna de las finanzas globales que muchas veces no comparte Minsky, ni otros grandes economistas incluídos en el texto. A la luz de los eventos históricos más recientes, la confrontación de Polanyi y Minsky nos ayuda a considerar el desmoronamiento del orden global monetário y el problema de cómo reestablecerlo.</p><p> </p>

The battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the making of a new world order, by Benn Steil

Benn Steil The battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the making of a new world order Princeton: Princeton University Press, 2013. 472pp., $19.75 (hardcover) ISBN-1 3: 978-0691 149097The popular narrative holds that the United Nations Monetary and Financial Conference, held at Bretton Woods, New Hampshire in 1944, was a mutually beneficial partnership between Britain and the United States to create a stable global monetary order. As the Council on Foreign Relations' Benn Steil shows in this historical account, however, such thinking has been a convenient fig leaf covering emergent American global ambitions and the British Empire's precarious international position. Steil also uses the conference as a canvas upon which to paint the larger picture of transatlantic relations, exploring the diplomatic and economic context for an emerging multilateral vision for monetary and trade governance. His work plays upon this myth of Anglo-American partnership, critically examining its usefulness to both parties, but ultimately offering a more nuanced portrait of partisanship, politics, and the high-stakes game of economic diplomacy played to great effect against the uncomfortable relationship between the great British economist John Maynard Keynes and the head of the American negotiation team, Harry Dexter White, who was later revealed to be a Soviet mole.White was a consummate political insider, a man of limited means and significant ambition who worked his way up in the US Treasury after failing to land a tenure-track position at Harvard University. A policy wonk, his mastery of the technical details that would become the new global monetary order rivalled even that of Keynes himself. Keynes, on the other hand, was a man of wealth and privilege his name a byword for genius. Even so, throughout the Second World War, Keynes would overestimate American sympathy for Great Britain. London might have been perceived popularly as a repository of culture and an incubator of democracy, but it was also an economic rival whose colonial relationships interfered with American exports and undermined monetary stability (96 97). Keynes did not fully comprehend the public antipathy for perceived British highhandedness in global economic affairs, and this as much as White's political skill proved to be his undoing.At the Bretton Woods conference, both Keynes and White determined to carve out for their respective governments the maximum amount of freedom for creating and enacting domestic economic policies to their future political advantage. White assured the dominant place of the dollar in the postwar economic order. Keynes manoeuvred for political space between the contractual details of lend-lease, the US Treasury's ambitious goals, and the proposed international financial institutions, which would either help or hinder Britain in the reconstruction of its war-ravaged economy (133). …

Nový globální měnový a finanční systém a otázka hegemonie

The article deals with the world functioning from the view of the hegemonic stability theory, which proposes that open international systems are connected with a dominant state existence, and possibly its post-hegemonic functioning in the form of country co-operation. The question is demonstrated on the example of the US dollar performing the role of the key world currency in both private and official use at present: it prevails in foreign currency transactions, in international reserves, in overseas bank deposits and loans, etc. Problems of the global economy, especially global imbalances, have led to suggestions by China, other countries and the International Monetary Fund to reform the global monetary order. These suggestions have taken the form of a multi-polar system of more currencies belonging to the economically most important countries (dollar zone, euro zone, Asian currency zone). Other suggestions include a system based on Special Drawing Rights, where a change ought to be made in the basket currencies adequately to the world economic situation, and a system of creating a new global currency. The advantages of a new global currency would be especially no connection to national economy developments, higher stability and no risk on assets denominated in this currency due to the highest rating. It is discussed which attitudes of the main countries such as the USA, BRIC and others could be possible in the view of the theories mentioned.