International Financial Instability in a World of Currencies Hierarchy
The 1990s have witnessed an increase of international financial turbulence. Indeed, the frequency, the size, the geographic extension, and the social costs of financial crises have made the topic a global policy issue. An array of policy actions have been advocated to prevent crises from happening again. A major controversial question is whether efforts should be directed towards national reforms in emerging markets or, rather, towards a new international design of international payments. After a critical review of the standing proposals, this paper contends that this debate has not yet fully explored one of the problems of international instability, that is to say, the problem raised by international payments in a world of currencies of diverse quality. As Keynes firmly contended, the monetary side of the (global) economy is not a neutral factor. In fact, it may be the problems posed by the different degrees of “international moneyness” that make currencies unequal that should be considered as one of the fundamental factors behind any model of international financial instability. Viewed in this light, a major re-design of international payments systems is warranted, and options seem limited to either world dollarization or the ‘bancor’ solution. Recent reformulations of Keynes’s original ‘bancor’ proposal seem to be a more viable alternative to either the status quo or world dollarization.
|Date of creation:||Sep 2005|
|Publication status:||Published in Louis-Philippe Rochon and Sergio Rossi (eds.), Monetary and Exchange Rate Systems: A Global View of Financial Crises, Edward Elgar, 2006.|
|Contact details of provider:|| Web page: http://www.unicatt.it/Istituti/EconomiaFinanza|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barry Eichengreen and Carlos Arteta., 2000.
"Banking Crises in Emerging Markets: Presumptions and Evidence,"
Center for International and Development Economics Research (CIDER) Working Papers
C00-115, University of California at Berkeley.
- Eichengreen, Barry & Arteta, Carlos, 2000. "Banking Crises in Emerging Markets: Presumptions and Evidence," Center for International and Development Economics Research, Working Paper Series qt3pk9t1h2, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Barry Eichengreen & Carlos Arteta, 2001. "Banking Crises in Emerging Markets: Presumptions and Evidence," Macroeconomics 0012012, EconWPA.
- Reinhart, Carmen & Kaminsky, Graciela, 1999.
"The twin crises: The causes of banking and balance of payments problems,"
14081, University Library of Munich, Germany.
- Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
- Graciela L. Kaminsky & Carmen M. Reinhart, 1996. "The twin crises: the causes of banking and balance-of-payments problems," International Finance Discussion Papers 544, Board of Governors of the Federal Reserve System (U.S.).
- Reinhart, Carmen & Kaminsky, Graciela, 2000.
"Las crisis gemelas: las causas de los problemas bancarios y de balanza de pagos
[The twin crises: Te causes of banking and balance of payments problems]," MPRA Paper 13842, University Library of Munich, Germany.
- Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
- Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 51-82, 04.
- Philip Arestis & Santonu Basu & Sushanta Mallick, 2005. "Financial globalization: the need for a single currency and a global central bank," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(3), pages 507-531, April.
When requesting a correction, please mention this item's handle: RePEc:ctc:serie3:ief0064. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Massimo Bordignon)
If references are entirely missing, you can add them using this form.