A New Financial Governance Model for the New Global Economy of the 21st Century
This paper has been included in the publication
“Ideas towards a new international financial architecture?”
The mission and mandate of economic governance and its accompanying institutional architecture requires a realignment in order to conform to the realities of the new global economy of the 21st century. Two recent economic events, one foundational and the other cataclysmic, have precipitated the need for a new vision and a new direction for financial governance. These two defining milestones are: 1.the emergence of the new economy and 2.the aftermath of the financial crisis of 2008.
The new global economy of the 21st century is composed of a trilogy of interactive forces that include globalization, trade liberalization and the information technology and communications revolution. Globalization has melted national borders and redefined economic policy. Free trade has enhanced economic integration and extended the economic architecture. The information and communications revolution has made geography and time irrelevant and enhanced the reach of economic parameters.
The global financial crisis of 2008 took everybody by surprise. Furthermore, the financial crisis had a more devastating effect than simply creating the most significant global economic crisis since the Great Depression of the 1930’s. It revealed the structural fault lines on the contemporary economic landscape.
In consequence, the institutional architecture of economic governance requires modernization as well as transitional and transformational change. This is particularly true since the existing economic governance architecture was designed for the old economy and has proved ineffective and inadequate for the new economy.
The aftermath of the financial crisis has precipitated a more interventionist role for government and has laid the foundations for new institutional and regulatory structures that will impact on the financial landscape of the 21st century. This paper explores the future architectural governance landscape for the financial industry and the scope and substance of regulatory initiatives and mechanisms that should be designed in order to avert a future financial crisis.
Constantine E. Passaris, firstname.lastname@example.org, Professor of Economics & Onassis Foundation Fellow
University of New Brunswick, Canada.