The increased frequency and virulence of international
currency and financial crises suggest that instability
has become global and systemic. This volume, which
embodies the most recent analysis formulated in
the United Nations Conference on Trade and Development
(UNCTAD), argues that strengthening of institutions
and arrangements at the international level is
essential if the threat of such crisies is to
be reduced and if they are to be better managed
when they do occur. Yet its review of recent measures
shows how little has been done to establish effective
global arrangements that address the main concerns
of developing countires. Instead what reform has
taken place has emphasized only what should be
done by national institutions, and even then has
failed to adopt an even-handed approach between
debtors and creditors. The book reviews the
initiatives undertaken so far and contrasts
them with the kind of measures proposed to address
systemic failures and global instability. The
proposals draw on the latest ideas being discussed
amongst leading economists and embrace four
main areas:
- Rules and institutions to set standards
and regulate international capital flows;
- The exchange rate system, in particular
whether developing countries can both maintain
an open capital account and attain exchange
rate stability when major reserve currencies
are subject to frequent gyrations and misalignments
and international capital movements are extremely
unstable;
- A more orderly workout with improved mechanisms
to resolve the continuing international debt
problem;
- Reform of the IMF, especially surveillance,
conditionality, the provision of international
liquidity, and its potential function as a
lender of last resort.
The book concludes with the question of the
management of financial crises when they do
occur and burden sharing, including the involvement
of the private sector.
|