Managing International Financial Instability : National Tamers Versus Global Tigers

Recurrent instability has characterized the global financial system since the 1980s. This instability and the resultant disruptions - to financial and foreign exchange markets, causing bankruptcies and sovereign debt defaults - are linked, in this book, to shortcomings of the global financial system which tend to generate cycles of boom and bust in credit flows. These cycles are set in motion by the monetary impulses of major industrial countries and are amplified and propagated through the operation of global financial markets. Fabrizio Saccomanni argues that to counter such systemic instability requires that national authorities give adequate weight to financial stability objectives when formulating their monetary and regulatory policies. He maintains that appropriate multilateral strategies to deal with unsustainable trends in credit aggregates and asset prices should be devised in the institutions of international monetary and financial cooperation. Recurrent instability has characterized the global financial system since the 1980s, eventually leading to the current global financial crisis. This instability and the resultant disruptions - sovereign debt defaults, exchange rate misalignments, financial market illiquidity and asset price bubbles - are linked, in this book, to the shortcomings of the global financial system which tends to generate cycles of boom and bust in credit flows. These cycles are set in motion by the monetary impulses of major industrial countries and are amplified and propagated through the operation of global financial markets. Fabrizio Saccomanni argues that to counter such systemic instability requires that national authorities give adequate weight to financial stability objectives when formulating their monetary and regulatory policies. He maintains that appropriate multilateral strategies to deal with unsustainable trends in credit aggregates and asset prices should be devised in the International Monetary Fund in the context of a strengthened framework to deal with global payments imbalances and exchange rate misalignments. Providing a comprehensive historical and analytical survey of the causes, consequences and possible cures of international financial instability, this book will be of great interest to students and academics of international economics and finance. It will also appeal to financial market participants and analysts, government officials and central bankers as a comprehensive survey of the relevant academic literature and of the state of the policy debate. Recurrent Instability Has Characterized The Global Financial System Since The 1980s. This Instability And The Resultant Disruptions - To Financial And Foreign Exchange Markets, Causing Bankruptcies And Sovereign Debt Defaults - Are Linked, In This Book, To Shortcomings Of The Global Financial System. Foreword / Tommaso Padoa-schioppa -- Pt. I. The Tigers, The Tamers, The Circus -- 1. An Uneasy Relationship -- 2. Global Financial Players -- 3. Monetary And Financial Authorities -- 4. The Global Market For Foreign Exchange -- Pt. Ii. Global Finance Between Crisis And Reform -- 5. The Crises Of Global Finance -- 6. In Search Of International Monetary And Financial Stability -- Pt. Iii. Challenging The Tigers -- 7. A Cage For The Dollar: The Plaza And Louvre Accords (1985-87) -- 8. The Seven-year War Of The French Franc (1991-98) -- 9. The Resistible Rise Of The Yen (1995) -- 10. Double Play In Hong Kong (1998) -- 11. A Safety Net For The Euro (2000) -- 12. The Great Wall Of The Chinese Renminbi (1994-2005) -- 13. How Did They Do It? -- Pt. Iv. Epilogue -- 14. The Golden Mean. Fabrizio Saccomanni. Expanded Version Of: Tigri Globali, Domatori Nazionali. Bologna : Mulino, 2002. Translated By Alice Chambers. Includes Bibliographical References (p. 249-272) And Index. COVER......Page 1 Copyright......Page 4 Contents......Page 5 Figures......Page 8 Tables......Page 9 Abbreviations......Page 10 Foreword......Page 13 Preface......Page 17 PART I The tigers, the tamers, the circus......Page 21 1. An uneasy relationship......Page 23 2. Global financial players......Page 31 3. Monetary and financial authorities......Page 55 4. The global market for foreign exchange......Page 83 PART II Global finance between crisis and reform......Page 107 5. The crises of global finance......Page 109 6. In search of international monetary and financial stability......Page 160 PART III Challenging the tigers......Page 193 7. A cage for the dollar: the Plaza and Louvre Accords (1985-87)......Page 195 8. The seven-year war of the French franc (1991-98)......Page 206 9. The resistible rise of the yen (1995)......Page 218 10. Double play in Hong Kong (1998)......Page 225 11. A safety net for the euro (2000)......Page 231 12. The great wall of the Chinese renminbi (1994-2005)......Page 238 13. How did they do it?......Page 244 PART IV Epilogue......Page 247 14. The golden mean......Page 249 Bibliography......Page 269 Index......Page 293