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The ongoing weakening of the international financial system

Author

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  • P. GRAY

    (Rutgers University)

Abstract

A hegemon-by-committee, or a group of nations playing the role of a dominant financial power, is necessary for the international financial system to withstand crises arising from drastic shifts of funds among national currencies, accompanied by large movements of exchange rates. These wide fluctuations in exchange rates and subsequent financial transactions can trigger a collapse of prices in dollar-denominated financial assets in US financial markets, thus undermining the global economy. With no single nation apparently capable of playing the hegemon, international cooperation is imperative. An important theme of the paper is that allocative efficiency may not be compatible with adequate financial stability efficiency.

Suggested Citation

  • P. Gray, 1996. "The ongoing weakening of the international financial system," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 49(197), pages 165-186.
    • Handle: RePEc:psl:bnlqrr:1996:22
    as

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10611/10495
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    References listed on IDEAS

    as
    1. Gray, Jean M. & Gray, H. Peter, 1981. "The multinational bank: A financial MNC?," Journal of Banking & Finance, Elsevier, vol. 5(1), pages 33-63, March.
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    3. James Tobin, 1978. "A Proposal for International Monetary Reform," Eastern Economic Journal, Eastern Economic Association, vol. 4(3-4), pages 153-159, Jul/Oct.
    4. Eichengreen, Barry, 1987. "Hegemonic Stability Theories of the International Monetary System," CEPR Discussion Papers 193, C.E.P.R. Discussion Papers.
    5. Martin Feldstein, 1988. "The United States in the World Economy," NBER Books, National Bureau of Economic Research, Inc, number feld88-1.
    6. Neil Wallace, 1990. "Why markets in foreign exchange are different from other markets," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 14(Win), pages 12-18.
    7. Peter B. Kenen, 1994. "Managing the World Economy: Fifty Years After Bretton Woods," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 48, April.
    8. H. Peter Gray, 1974. "An Aggregate Theory of International Payments Adjustment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01768-3, October.
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    Cited by:

    1. Dominick Salvatore, 1998. "International Monetary and Financial Arrangements: Present and Future," Open Economies Review, Springer, vol. 9(1), pages 375-416, January.

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    More about this item

    Keywords

    Administration of General Economic Programs; Intnl Economic Policy; Exchange rates; global instability;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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