The Global Governance Complex for Financial Stability

• In Event: Evolution of International Regime Complexes: Adaptation and Maladaptation

Abstract

The scale, diversity, and density of institutions that constitute the global governance complex for financial stability have grown over time, from a small number of formal IGOs (BIS, IMF) to a diverse mix of formal and informal forums (G7, G20), specialized bodies (FSB), regional financial agreements, standard setting-bodies, as well as an expanded role for national central banks. The complex took form and was consolidated across four periods: it existed in a nascent form after 1945 with the creation of a liberal international economic system, in an emergent constellation after 1975 when financial markets and national jurisdictions became more integrated, and in fuller and consolidated forms after crises in the 1990s and 2000s. Illustrations come from two sets of institutions and practices that are designed to stabilize national economies and systemically important firms, including those that are designed to prevent crises, provide liquidity in times of crises, and encourage prudential economic policies and strategies. These domains remain institutionally patchy, decentralized, and deeply anchored in a mixture of informal and formal institutions. The complex is not, however, one that lacks hierarchies and thus not one that conforms to earlier notions of a regime complex. Rather, the complex for financial stability has retained significant elements of hierarchy by expanding the role of the IMF, creating a new focal organization in the Financial Stability Board, and maintaining an outsized role for the United States in shaping governance arrangements.

Authors

• Karl Orfeo Fioretos, Temple University

• Walter James, Temple University