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Assessing changes in the global financial architecture from an emerging market perspective

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  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

Abstract

The paper assesses changes in the global financial architecture and related global governance. Despite useful reforms lacunae remain. Analysis of financial regulations and measures to address global imbalances show serious weaknesses in addressing risks from shadow banking and large banks that are responsible for volatile capital flows to emerging markets (EMs). The underlying philosophy that intervention and controls distort markets and manipulate currencies weakens the toolbox available to EMs to deal with volatile capital flows. The use of interest rates, quantitative easing, and deficits are regarded as a valid response to domestic conditions, and their effect on commodity price inflation hitting EMs not acknowledged. Despite greater representation of EMs in the G-20 adjustment continues to be asymmetric. This harms global stability and recovery. Universal adoption of some basic minimal measures can close arbitrage gaps and resolve many problems.

Suggested Citation

  • Ashima Goyal, 2013. "Assessing changes in the global financial architecture from an emerging market perspective," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-006, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2013-006
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2013-006.pdf
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    References listed on IDEAS

    as
    1. Ashima Goyal, 2010. "Regulatory Structure for Financial Stability and Development," Working Papers id:2458, eSocialSciences.
    2. Goyal Ashima, 2005. "Asian Reserves and the Dollar: Is Gradual Adjustment Possible?," Global Economy Journal, De Gruyter, vol. 5(3), pages 1-26, September.
    3. Bernanke, B.S., 2011. "International capital flows and the returns to safe assets in the United States 2003-2007," Financial Stability Review, Banque de France, issue 15, pages 13-26, February.
    4. Hyun Song Shin & Kwanho Shin, 2011. "Procyclicality and Monetary Aggregates," NBER Working Papers 16836, National Bureau of Economic Research, Inc.
    5. Ashima Goyal & Shruti Tripathi, 2012. "Regulations and price discovery: oil spot and futures markets," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-016, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
    7. Mr. Jonathan David Ostry & Mr. Atish R. Ghosh & Mr. Anton Korinek, 2012. "Multilateral Aspects of Managing the Capital Account," IMF Staff Discussion Notes 2012/010, International Monetary Fund.
    8. Anand Sinha, 2011. "Macroprudential Policies: Indian Experience," Working Papers id:4218, eSocialSciences.
    9. Ashima Goyal, 2014. "Banks, policy, and risks: how emerging markets differ," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 10(1/2/3), pages 4-26.
    10. Joshua Aizenman, 2010. "Hoarding international reserves versus a Pigovian tax-cum-subsidy scheme: Reflections on the deleveraging crisis of 2008-9, and a cost benefit analysis," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
    11. John B. Taylor, 2009. "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong," NBER Working Papers 14631, National Bureau of Economic Research, Inc.
    12. Mr. Marcos d Chamon & Miss Mahvash S Qureshi & Dennis B. S. Reinhardt & Mr. Atish R. Ghosh & Mr. Karl F Habermeier & Mr. Jonathan David Ostry, 2010. "Capital Inflows: The Role of Controls," IMF Staff Position Notes 2010/004, International Monetary Fund.
    13. Jonathan David Ostry & Atish R. Ghosh & Anton Korinek, 2012. "Multilateral Aspects of Managing the Capital Account," IMF Staff Discussion Notes 12/10, International Monetary Fund.
    14. Samuel G. Hanson & Anil K. Kashyap & Jeremy C. Stein, 2011. "A Macroprudential Approach to Financial Regulation," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 3-28, Winter.
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    More about this item

    Keywords

    Global financial architecture; regulations; imbalances; currency wars; international governance;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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