Financial globalization? History, conditions and prospects

Do we have a genuine global financial system? This chapter challenges the strong notion that the recent financial crisis was global in scope. It examines and troubles several key aspects of the recent events, asking whether the international financial system is a genuinely ‘global’ one, whether the crisis itself was ‘global’ in its characteristics, and what the nature of the term ‘crisis’ means. It argues that the international financial system is quite differentiated, being made up of domestic-national, supra-national regional and inter-national aspects. The system is characterized by contagion, however, and the chapter goes on to consider the role of this in generating slipovers into the wider economic mechanism. And given this characterization of the financial system, the implications for how to organize a regulatory response are pursued. Here the argument is that the principle of ‘distributed preparedness for resilience’ should guide this response, not a new set of top-down global rules and norms organized once again by the institutions of global economic governance.