Armijo: Political Geography of World Financial Reform

Armijo, LE. 2001. Political Geography of World Financial Reform: Who Wants What and Why, The. Global Governance 7: 379.

Ever since the latter third of the 1990s and the collapse of many economies in South East Asia, there have been many calls for finance reforms. "The purpose of this essay is to demystify some of the major reform proposals, and to understand which countries and interests back them. I suggest that the reforms proposed by a loose coalition of 'financial stabilizers' make the most sense on economy efficiency grounds, but that the bargaining structure of the issue area is such that the reforms most likely to be implemented are those of the 'transparency advocates'" (1).

How does one define "Financial Architecture"? "Not unexpectedly, the definition of the beast is elastic. To multinational bankers and institutional. investors, reforms of the financial architecture means consensual global implementation of best practice standards of accounting and reporting of national and corporate financial information in developing countries. To many members of the U.S. Congress, it means that the [IMF]... and World Bank should slim down and stop wasting taxpayers' money. To Japan and many Western European governments it means that the U.S. government should cease acting like a one-man band in responding to global financial crises. To finance ministers in very poor countries, as well as to many middle class activists in the advanced industrial democracies, global financial reform means debt forgiveness...And to incumbent policy makers in the so-called emerging market countries...reform of the world's financial architecture usually implies creation of a global lender of last resort with deeper pockets than the present IMF" (2).

"For purposes of this essay, the global financial architecture is an 'international regime,' designating a set of 'principles, norms, rules and procedures' in an international issue area...The international financial regime includes but is not limited to norms and institutions governing exchange rate practices, regulation of all private cross-border financial flows, and management of the 'international financial institutions'..." (2).

Four groups are identified that are interested in financial reform, but that are motivated by different drivers. These are the following: laissez faire liberalizer, transparency advocates, financial stabilizers and anti-globalizers (3). Detailed overviews of each of these groups is presented. The author argues, as noted earlier, that the financial stabilizers are those that should be listened to, but that this is unlikely to actually happen.