A new international financial architecture: The regional versus the global view?
This paper has been included in the publication
“Ideas towards a new international financial architecture?”
This paper is geared to show the limitations of the existing financial architecture and the emergence of what appears to be a new financial architecture with regional financial frameworks. It starts by making a brief history of the existing international financial system and its role in international financial regulations in order to show lack of proper global organisations by arguing the changes in the governance issues of existing international financial institutions given the massive shift in world economic power and follows with the problem of a country based reserve currency, proposing a new reserve currency that will have more stability than current highly indebted country based reserve currencies, and thus serve better as a store of value. It explores direct exchange rates versus indirect exchange rates and weighs its costs and benefits and revises the existing experiences, to finally suggest ways forward in the strengthening of international financial regulations through regional mechanisms. The proposal concerns complicating the existing international institutional set up by including the new strong regional elements that are already evolving while redesigning global instruments such as the SDR while downscaling the role of the IMF.
Oscar Ugarteche, Instituto de Investigaciones Económicas, UNAM, México, email@example.com.