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The Legalization of International Monetary Affairs

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  • Simmons, Beth A.

Abstract

For the first time in history, international monetary relations were institutionalized after World War II as a set of legal obligations. The Articles of Agreement that formed the International Monetary Fund contain international legal obligations of the rules of good conduct for IMF members. Members were required to maintain a par value for their currency (until 1977), to use a single unified exchange-rate system, and to keep their current account free from restrictions. In this article I explore why governments committed themselves to these rules and the conditions under which they complied with their commitments. The evidence suggests that governments tended to make and keep commitments if other countries in their region did so as well. Governments also complied with their international legal commitments if the regime placed a high value on the rule of law domestically. One inference is that reputational concerns have a lot to do with international legal commitments and compliance. Countries that have invested in a strong reputation for protecting property rights are more reluctant to see it jeopardized by international law violations. Violation is more likely, however, in the face of widespread noncompliance, suggesting that compliance behavior should be understood in its regional context.

Suggested Citation

  • Simmons, Beth A., 2000. "The Legalization of International Monetary Affairs," International Organization, Cambridge University Press, vol. 54(3), pages 573-602, July.
    • Handle: RePEc:cup:intorg:v:54:y:2000:i:03:p:573-602_44
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    Citations

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    Cited by:

    1. Robert Trudel, 2005. "Effects of Exchange Rate Regime on IMF Program Participation," Review of Policy Research, Policy Studies Organization, vol. 22(6), pages 919-936, November.
    2. Seghezza, Elena & Morelli, Pierluigi, 2018. "Rule of law and balance of power sustain US dollar preeminence," Journal of Policy Modeling, Elsevier, vol. 40(1), pages 16-36.
    3. Tim Büthe & Helen V. Milner, 2008. "The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?," American Journal of Political Science, John Wiley & Sons, vol. 52(4), pages 741-762, October.
    4. Catherine Z. Worsnop, 2017. "Domestic politics and the WHO’s International Health Regulations: Explaining the use of trade and travel barriers during disease outbreaks," The Review of International Organizations, Springer, vol. 12(3), pages 365-395, September.
    5. Mariarosaria Agostino, 2004. "Conditionality, Commitment and Investment Response in LDCs," Economics Working Papers 2004-10, Department of Economics and Business Economics, Aarhus University.
    6. Julia Gray & Jonathan Slapin, 2012. "How effective are preferential trade agreements? Ask the experts," The Review of International Organizations, Springer, vol. 7(3), pages 309-333, September.
    7. Simon Hug & Thomas König, 2007. "Domestic structures and constitution-building in an international organization: Introduction," The Review of International Organizations, Springer, vol. 2(2), pages 105-113, June.
    8. Fouad Pervez, 2015. "Waiting for election season," The Review of International Organizations, Springer, vol. 10(2), pages 265-303, June.
    9. Swantje Renfordt, 2010. "How International Law Standards Pervade Discourse on the Use of Armed Force - Insights into European and US Newspaper Debates between 1990 and 2005," KFG Working Papers p0013, Free University Berlin.
    10. Martin Steinwand & Randall Stone, 2008. "The International Monetary Fund: A review of the recent evidence," The Review of International Organizations, Springer, vol. 3(2), pages 123-149, June.
    11. Stephen Nelson, 2010. "Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law," The Review of International Organizations, Springer, vol. 5(2), pages 107-139, June.

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