1st Edition
Reforming Global Economic Governance An Unsettled Order
The architecture of global economic and financial governance has undergone a deep and pervasive reform in the last ten years, radically transforming international institutions and groups, such as the International Monetary Fund, the G7, and the G20. This book investigates the new, unsettled order which is now prevailing, driven by the change in the balance of power between advanced economies and key emerging market economies.
Bringing together multiple strands of analysis, traditionally kept separate, Reforming Global Economic Governance: An Unsettled Order particularly explores the role of Europe within this changing world. The book documents and examines a broad range of events, building on methods from economics and other disciplines, as well as on the insights from the author’s personal involvement. This innovative approach allows the reader to ascertain the defining features of the reform: the increasing fragmentation of governance; the interconnectedness of its different elements; and the strong concern for inclusiveness. Furthermore, it presents analyses highlighting the controversial nature of the new order which underpins the current policy debate on international economic relations, including the resurgence of nationalism and trade conflicts. Through these explorations, this engaging book has direct relevance for the future prospects of international economic affairs.
Offering a comprehensive view of these issues, this accessible text will appeal to scholars, insiders, and the general reader. Its detailed and thorough analyses will also be of great use to those studying economics, international political economy, and international relations.
Introduction and overview
1. Unsettling the balance of power
Many failures led to the crisis
The waning grip of the G7
The upheaval in the (relative) wealth of nations
The need for international cooperation
The serendipitous G20
No finger-pointing in Washington
Conclusions
2. Success and failures of the G20
The crowning of the G20 as the world-saver
Revamping macroeconomic coordination
The old issues of international coordination confront the G20
Overhauling the international financial architecture?
Cannes (and Los Cabos) hijacked by the European crisis
Russia and the overbearing return of high politics
The BRIC(S) and the G20
Conclusions
3. The reform of the International Monetary Fund
IFIs, their shareholders, and global governance: a multifaceted interaction
The withering of IFIs
Palingenesis
The (latest) IMF quota reform
The Seoul package and its implementation
There is more to influence than quotas
Paradigm regained: the persistence of the Washington orthodoxy
Conclusions
4. Multilateral Development Banks in fashion again
The birth of the MDB business model
More development (and more MDBs) in global architecture
Defending and enriching the mainstream view of development
More than affordable finance
Malaise and revival of the MDBs
The reform of the MDBs
The brand new MDBs
Evergreen tensions and dilemmas
Conclusions
5. Re-regulating finance
The international standards regime and the creation of the FSF
What’s in a letter? From the FSF to the FSB
The daunting tasks of the FSB
Halfway, half-empty, half-hearted, yet significant
Rule-taking behavior
The exorbitant persistence
Conclusions
6. Europe and global governance
The long tradition of punching below one’s weight
Missing a crucial opportunity: the G20
Missing a crucial opportunity: the IMF
The IMF and the European crisis
Three misconceptions
The European decision-making process does not help
The decline is not inevitable
A more effective Europe is also good for the world
Conclusions
References
Index
Biography
Carlo Monticelli is Vice Governor of the Council of Europe Development Bank. His career has straddled both private and public sectors, with positions including Deputy Director in the Research Department of the Bank of Italy; Head of European Economics, Deutsche Bank, London; and Head of International Financial Relations of the Italian Treasury. In this capacity he represented Italy in key international fora such as the G7, the G20, and the Economic and Financial Committee of the European Union.
"Carlo Monticelli provides a unique insider’s perspective that combines the insights of a seasoned economist with the personal reflections of a concerned global citizen. A rewarding and enjoyable read for anyone interested in the causes and lessons of the global financial crisis!" Masood Ahmed, President, Center for Global Development
"The author is an insider. When reading him on how the Europeans missed all opportunities by just looking inward, you oscillate between hilarity and despair" Agnès Bénassy-Quéré, Professor, Paris School of Economics, University Paris 1 Panthéon-Sorbonne
"There is no going back to the old multilateralism. Based on first-hand experience and sharp analysis, this book provides the economic and political-economy arguments to understand why this is the case, wrapped in a captivating narrative accessible to the non-specialist. Don’t miss it!" Erik Berglöf, Director, Institute of Global Affairs, London
"An authoritative assessment of global economic governance at a time of pressing global challenges in an unsettled and fractious global order. A must, and a compelling read." Amar Bhattacharya, Senior Fellow, Brookings Institution
"Emerging market countries now play a more relevant role in the G20 and all the IFIs. With analytical rigour and an engaging style, this book analyzes the events and underlying reasons that brought about this radical change in global governance. Highly recommended." Sri Mulyani Indrawati, Finance Minister of Indonesia
"This book gives an inside story of how international financial architecture is created and reformed as advanced and large emerging market countries play power games." Takatoshi Ito, Professor of International and Public Affairs, Columbia University
"Combining an insider view with a multidisciplinary approach, this book offers fresh insights on why and how global economic governance has changed. A must read." Nouriel Roubini, Professor of Economics, Stern Business School, New York University
"Over the last decade, the international economic and financial landscape has changed much more than you think. This is the surprisingly convincing leitmotiv of this book. As a former official who has been involved in all the big issues from the inside, I did not expect Carlo Monticelli to be so candid and, in many ways, so radical. The book is loaded with a myriad of facts and yet the reader will not get lost because the powerful underlying analysis constantly brings all the pieces into a coherent lot. It makes you think hard but the style is so smooth and engaging that you do it with intense pleasure." Charles Wyplosz, Professor of Economics, The Graduate Institute, Geneva
