Global Financial System

Crypto Currencies (CC) have recently become one of the most debated topics in the public opinion. One of the most fundamental reasons for this is that the fluctuations in transaction volumes and prices of CCs that emerged in 2009 have increased visibly in recent years. CCs have many direct and indirect effects on the global monetary system and the world economy. At this point, as well as the factors that lead to the emergence of CCs, the change and transformation process that CCs create in the world economy is also very important. One of the factors that will determine the degree of future expansion of CCs will be the functions of money. The degree of which CCs can fulfill the functions of the classical currencies will have a direct impact on the process of CC dissemination. CCs can not fulfill the appraisal function at this time. The most basic reason for this is the excessive fluctuations in CC prices. This volatility prevents economic units from valuing any goods and services usi...

Neoliberalism has become a catch-all term for many ‘bad’ things from loose financial regulations through corporate malfeasance to trade liberalisation. Furthermore, different manifestations and a diverse array of policies, politics and political-economies have been characterised as neoliberal. Consequently there have been a number of attempts to define and delineate neoliberalism theoretically. On the one hand, these attempts have proved conceptually fruitful for understanding the transformative potential and actuality of recent economic restructuring. On the other hand, they have meant that we cannot identify a single form of neoliberalism or neoliberal restructuring; rather we have to identify varieties of neoliberalism or variegated neoliberal restructuring. What these theoretical discussions highlight is a series of ambiguities, tensions and contradictions in the definition of neoliberalism. For example, between the erosion (or even subversion) of the national state and its continuing role in (dis)organising the global economy; between the institutionalisation of monetarism as a state strategy and the need to maintain high public spending and public debt; between the role of the state as lender of last resort and as facilitator of asset price bubbles; and, between the curtailment of real wages in an economy dependent on consumption and rising personal debt alongside a financialised system for welfare (e.g. pensions). The main objective of this paper is to reconsider neoliberalism as the main explanation for the recent and ongoing financial mess we are in. It is essential at this juncture to undertake this task in order to understand what underpins the financial crisis. Is it a free-market or neoliberal ideology and set of policies? Or is it something else that critical thinkers should have been focusing on all along? Have we missed something that is central for understanding national and international political economy? This leads me to question whether we have ever been neoliberal after all.

This paper presents the Offshore-Intensity Ratio – a simple and straightforward way to identify which countries and jurisdictions could be seen as offshore financial centres (OFCs). By setting the aggregated amount of external capital booked in a jurisdiction in relation to the size of its domestic economy, we get a ratio that expresses the strength with which the particular jurisdiction has acted as a magnet for foreign capital. Sixteen jurisdictions are identified as probable OFCs, including the Cayman Islands, the British Virgin Islands, Bermuda and Luxembourg, but also Ireland and the Netherlands. A novel visualization shows the role of the largest offshore centres in contemporary global finance.

This article focuses on the two recently established multilateral development banks (MDBs) dominated by emerging economies: Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB). The authors explore the main economic and political incentives that lie behind the creation of these institutions, examine challenges and opportunities they are likely to face, and provide a forecast of their loan portfolios growth in the coming years. The forecast includes two scenarios: basic and optimistic, and is based on the analysis of NDB and AIIB differences from traditional banks, and potential benefits and challenges they can bring. The methodology used for assessment allows projecting the financial capacity of the two banks based on their announced shareholder capital and likely financial performance determined by membership, governance arrangements and other factors, and takes into account recent developments in both banks. Based on the forecast, the authors conclude that in ten years the new banks will be able to provide infrastructure financing at the level of traditional institutions working in the area. In order to develop in accordance with the optimistic scenario, the new banks should adhere to their basic alternative principles, but also rely on the experience of traditional banks in areas where they have proved their effectiveness. These include exchange of experience on selection of projects, social and environmental safeguards, and monitoring results. Apart from addressing the global infrastructure gap, the new banks could also stimulate traditional ones to reform their governance and change operational modalities and thus become more responsive to developing countries’ interests.

Before pandemic the world economy had a pre-crisis situation which
was characterized by unprecedented imbalances in the global financial
and economic system, the lack of growth in world GDP, which posed a
real threat to the world economic order. Almost all global analysts
predicted a global economic crisis at the end of 2019. For the first time
since time immemorial, bank interest rates in all countries have dropped
to unprecedented low levels. Often interest rates were 0% or even
negative. The EU’s financial system has been so disfigured by the VAT
tax that fraud with this tax has reached a scale far exceeding hundreds of
billions EUR and in fact got out of control of the authorities. The
imperfection of the EU’s financial system led to Brexit, statements by
the actually bankrupt Italy, and other countries about their intention to
leave the euro zone. The EU was not able to adopt a budget for the next
7 years. The US trade wars with China, the US with Europe, the
complete impasse of the Russian economy and much more led to the
fact that the global crisis was already on the verge. The global recession
was about to begin.

Crypto Currencies (CC) have recently become one of the most debated topics in the public opinion. One of the most fundamental reasons for this is that the fluctuations in transaction volumes and prices of CCs that emerged in 2009 have increased visibly in recent years. CCs have many direct and indirect effects on the global monetary system and the world economy. At this point, as well as the factors that lead to the emergence of CCs, the change and transformation process that CCs create in the world economy is also very important. One of the factors that will determine the degree of future expansion of CCs will be the functions of money. The degree of which CCs can fulfill the functions of the classical currencies will have a direct impact on the process of CC dissemination. CCs can not fulfill the appraisal function at this time. The most basic reason for this is the excessive fluctuations in CC prices. This volatility prevents economic units from valuing any goods and services using CC. This prevents the spread of CCs. However, as this fluctuation will persist over time, CCs will begin to fulfill the function of appraisal and the process of dissemination will accelerate. The power of governments to direct economic and monetary policy will change and transform with the spread of CCs. The effect of this change and the extent to which the states will allow this change remain unclear. Besides, how CCs will affect the global reserve money system is also very important. It remains unclear whether the CCs will be used as reserve currency in the future and how the major central banks will react to it. CCs are also closely related to the seignoirage income. As the CCs become widespread, the seignoirage income which the major central banks obtained from the banknotes will also be jeopardized. The question of how states and central banks will react to this should also be discussed. Measures that are taken against crypto-currencies by the central banks, whose seigniorage income decreases, will be determinant of the global reserve money system. The purpose of this study is to foresee the future of the global reserve money system with the emergence of CCs and how the seignoirage income of central banks will be affected from this process.

Neuere politische und soziologische Ansätze untersuchen die Performativität des Finanzsystems, also die Frage, wie Politik, Finanzpraktiken und Wirtschaftswissenschaft das Finanzsystem gestalten und konstituieren, wobei sich bislang zwei Forschungsrichtungen herausgebildet haben. Während der eine Ansatz mit Rückgriff auf Callon die Performativität konkreter Handlungen der Finanzakteure in den Blick nimmt, bezieht sich der andere auf Foucault und Butler und betont, dass die diskursive Struktur des Finanzsystems der analytische Ausgangspunkt sein sollte, um deren Auswirkungen auf die alltäglichen Lebensverhältnisse zu untersuchen. Beiden Ansätzen fehlt allerdings ein Konzept, das Mikro- und Makroebene analytisch zusammenbringt und insbesondere die politischen Konflikte um die Gestaltung des globalen Finanzsystems berücksichtigt. Diese Lücke, so wird dargelegt, kann mit der poststrukturalistischen Hegemonietheorie geschlossen werden. Zugleich wird die sozioökonomische Selektivität sedimentierter Finanzstrukturen durch das Konzept der stratifizierten Hegemonie erklärt. Am Beispiel der politischen Governance der Euro-Krise wird die performative Kraft der Austeritätspolitik diskutiert.

Die Governance der Liquidität der Finanzmärkte hat sich in den letzten Jahren stark verändert. Während vor der globalen Finanzkrise Liquidität immer stärker von privaten Akteuren generiert worden war, wird staatlichen Institutionen und insbesondere den Zentralbanken inzwischen wieder eine wichtige Rolle zugesprochen. Es ist eine scheinbar paradoxe Entwicklung zu konstatieren, bei der private Akteure eine immer bedeutendere Rolle in der Generierung von Liquidität erhalten und staatliche Institutionen immer wichtiger hinsichtlich der Absicherung dieser Liquiditätsgenerierung werden. Der Beitrag hinterfragt die Dichotomie von Finanzmarkt und Staat und argumentiert, dass der Staat stets eine zentrale Stellung in der Governance der Finanzmarktliquidität innehatte, wenn diese auch während und nach der globalen Finanzkrise deutlich offensiver geworden ist. Erstens setzt Politik den politischen und rechtlichen Rahmen, in dem sich der „freie Markt“ entfalten kann. Zweitens wäre die finanzmarktinterne Verbriefung von Wertpapieren und insbesondere von Hypotheken ohne staatliches Engagement im großen Stil nicht möglich gewesen. Und drittens basiert auch das privat organisierte Finanzsystem letztlich auf staatlichen Sicherheiten, vor allem den Staatsanleihen, ohne die es nicht funktionieren könnte. Die Gewährleistung von Liquidität und die Stabilität der Finanzmärkte ist folglich kein Problem, das sich außerhalb des Staates abspielen würde. Vielmehr ist die Governance der Finanzmärkte eine genuin politische Frage. Aufbauend auf der Performativitätstheorie und der Internationalen Politischen Ökonomie argumentiert der Beitrag, dass es für eine Analyse der Governance der Liquidität im globalen Finanzsystem notwendig ist, die Ko-Konstitution von Finanzakteur und Finanzsystem und damit die soziale, politische und strukturelle Dimension der Liquiditätsgenerierung auf den Finanzmärkten zu untersuchen.

In his widely recognized speech to the Financial Students Association, Andrew G. Haldane, Executive Director of the Bank of England, characterized the global financial system as a complex, adaptive network (Haldane 2009). National financial markets and institutions are strongly interconnected. Turmoil in one region of the network quickly affects other regions. In this paper, I review the findings of hitherto network analyses of the financial system and discuss their policy implications. I consider two strands of literature: Studies belonging to the first strand predominantly use mathematical modeling to examine the relation between the interconnectedness of financial institutions and the risk of contagion. Studies belonging to the second strand are based on empirical data from the BIS International Banking Statistics and describe the structural developments of the global network of national financial sectors (these are interconnected through cross-border bank exposures) from the 1980s onward. On the basis of these studies’ findings, I discuss past and present developments in international financial regulation.

Beitrag einsehbar unter: https://rdcu.be/9W9e Der Beitrag untersucht die Geldpolitik der Zentralbanken, die es erstmals auch Nichtbanken ermöglicht, Geld zu schöpfen. Hierfür wird das Konzept der Liquiditätsketten entwickelt. Eine Liquiditätskette beschreibt ein komplexes politisch-institutionelles Ensemble, welches bestimmte Vermögenswerte in Geld bzw. in einen Vermögenswert mit höherer Liquidität umwandelt. Es wird argumentiert, dass durch finanzmarktinterne Prozesse diverse Kreditformen mit unterschiedlicher Liquidität geschaffen werden. Geld und Quasi-Geld hingegen können allein aufgrund politischer Prozesse entstehen, die über (staatlich) institutionalisierte Liquiditätsketten aus einem Vermögenswert einen allgemeinen Wertmaßstab generieren. Als sich die globale Finanzkrise 2008 zuspitzte, war die bestehende Liquiditätskette zwischen Banken und Zentralbanken nicht in der Lage, die Krise zu stoppen. Grund hierfür war, dass die bestehenden Liquiditätsketten nicht das Schattenbank...

Central bank digital currencies (CBDCs) are been designed a ‘new normal’ for the world of finance in which payments (digital currency) can be made directly from one party to another without financial intermediaries regardless macroeconomic links. Digital currency has ushered the world of finance into uncharted waters as central banks and international institutions crumble to fine their feet’s in a fast moving stream of decentralised finance (DeFi) and global stablecoins. As central banks embark on the CBDCs journey, there are number of questions which must be address:  What problems are CBDC’s expected to solve? How do current design thinking resolve these problems in Africa?  Are there alternatives to CBDCs in Africa? Broadly, CBDCs are expected to resolve inefficient and costly domestic and cross-border payments and settlement, ensure price stability and financial stability, retain monetary policy independence and digital de-dollarization. A qualitative descriptive design has been adopted in this study.
Findings. Central bank digital currencies (CBDCs) well-designed in a new multilateral fair and just international monetary architecture has the potential to ensure price stability and financial stability in both advanced and developing economies in general, but more importantly would enable developing countries to regain some among of monetary policy independence.  However, under the CBDCs design thinking within the framework of existing international monetary and financial architecture, no economy in Africa can withstand the powers of BigFintech, DeFi, global stablecoins and foreign sovereign digital currencies. This paper concludes that African countries must decide whether to cede their sovereign power to an independent monetary authority with single digital currency to manage under their control or cede their economic and financial destiny to unaccountable foreign BigFintech and/or foreign sovereign CBDCs in form of digital dollarization.
Keywords: digital currency, CBDCs, digital dollarization, international monetary system, Africa

After every major economic crisis, the global financial architecture changes markedly. The COVID-19 crisis will not be an exception. The current expert discussions are largely focused on a possible shift towards de-globalisation processes, the strengthening of regionalism and the role of nation-states. Recognising the factors behind these fears, Evgeny Vinokurov, Chief Economist of the Eurasian Fund for Stabilisation and Development, shows the multilevel and complex nature of the current processes in the institutions responsible for the anti-crisis function of the globes financial architecture.

The 2008 global financial crisis and the ongoing European sovereign debt and economic crisis continue to raise many important questions. How do we conceptualize monetary sovereignty in light of increasingly integrated financial markets and shrinking possibilities for states to determine their monetary policy independently? How can responsible lending and borrowing be secured in order to prevent the next sovereign default, whose effects in today’s world will almost certainly not be limited to a specific country, but will “infect” other countries, their financial systems, and the global economy? How does international financial regulation work if it escapes the traditional characteristics of international law because it is “soft” and transnational on the one hand rather than international on the other hand? Finally, what role can, should, or does law play in monetary affairs? Does it rule? 
All of these questions either lie at the core of, or are, in varying degrees of depth and comprehensiveness, addressed in the four books that this review essay discusses. These books stand for a growing trend in international law, namely the (re-)discovery of the importance of international financial and monetary law in the wake of the 2008 global financial crisis, which, together with European sovereign debt and economic crises, triggered the aforementioned questions. What this trend also reflects is that crises are best perceived and understood as a catalyst for change: for a change of interests, a change of perspectives, and a change of theoretical and analytical concepts that define our research frameworks.

This article aims to analyze the challenges posed by the illicit financial flows (IFFs) that emerged from the consolidation and globalization of financial markets and the persistent and rising inequality of wealth and income. In a first step, we show the key dimensions behind IFFs (governance, trade, finance, taxation, monetary), which affect the multilateral order and promote new relations of dependence between the Global North and the Global South. In a second step, we analyze the cartographic representation of the developing world regarding the challenges posed by IFFs. We argue that IFFs are a subproduct of inefficient international policies and multilateral regulatory frameworks that have decreased the scope of action of nation-states and reduced the incentives for them to cooperate in certain areas of financial markets and global governance, such as international cooperation on tax and IFFs. In the article, we examine the multidimensionality of IFFs through multivariate techni...

Die Governance der Liquidität der Finanzmärkte hat sich in den letzten Jahren stark verändert. Während vor der globalen Finanzkrise Liquidität immer stärker von privaten Akteuren generiert worden war, wird staatlichen Institutionen und insbesondere den Zentralbanken inzwischen wieder eine wichtige Rolle zugesprochen. Es ist eine scheinbar paradoxe Entwicklung zu konstatieren, bei der private Akteure eine immer bedeutendere Rolle in der Generierung von Liquidität erhalten und staatliche Institutionen immer wichtiger hinsichtlich der Absicherung dieser Liquiditätsgenerierung werden. Der Beitrag hinterfragt die Dichotomie von Finanzmarkt und Staat und argumentiert, dass der Staat stets eine zentrale Stellung in der Governance der Finanzmarktliquidität innehatte, wenn diese auch während und nach der globalen Finanzkrise deutlich offensiver geworden ist. Erstens setzt Politik den politischen und rechtlichen Rahmen, in dem sich der „freie Markt“ entfalten kann. Zweitens wäre die finanzmarktinterne Verbriefung von Wertpapieren und insbesondere von Hypotheken ohne staatliches Engagement im großen Stil nicht möglich gewesen. Und drittens basiert auch das privat organisierte Finanzsystem letztlich auf staatlichen Sicherheiten, vor allem den Staatsanleihen, ohne die es nicht funktionieren könnte. Die Gewährleistung von Liquidität und die Stabilität der Finanzmärkte ist folglich kein Problem, das sich außerhalb des Staates abspielen würde. Vielmehr ist die Governance der Finanzmärkte eine genuin politische Frage. Aufbauend auf der Performativitätstheorie und der Internationalen Politischen Ökonomie argumentiert der Beitrag, dass es für eine Analyse der Governance der Liquidität im globalen Finanzsystem notwendig ist, die Ko-Konstitution von Finanzakteur und Finanzsystem und damit die soziale, politische und strukturelle Dimension der Liquiditätsgenerierung auf den Finanzmärkten zu untersuchen.

Ziel des Beitrages ist es, eine Darstellung und Interpretation bestehender Analysen der Finanzmarktkrise vorzulegen. Der Beitrag systematisiert die IPÖ-Analysen der globalen Finanzkrise anhand der verschiedenen analytischen Zugänge zur Krise mit Fokus auf (a) den Zusammenhang zwischen US-Innenpolitik und Wohneingentumsmarkt; (b) die Praktiken, Produkte und internen Logiken des Finanzsystems; (c) die allgemeine Instabilität des Finanzsystems; (d) Finanzialisierungsprozesse und globale Finanzmarktpolitik; (e) die kapitalistische Produktionsweise im Allgemeinen und (f) die Reflexivität von Finanzmarktprozessen.