Multilayered Governance and the International Financial Architecture: The Erosion of Multilateralism in International Liquidity Provision
| Date | 01 June 2018 |
| DOI | http://doi.org/10.1111/1758-5899.12561 |
| Author | Domenico Lombardi,Anton Malkin,Barry Eichengreen |
| Published date | 01 June 2018 |
Multilayered Governance and the International
Financial Architecture: The Erosion of
Multilateralism in International Liquidity
Provision
Barry Eichengreen,
Centre for International Governance Innovation
Domenico Lombardi
Banca di San Marino S.p.A
Anton Malkin
Centre for International Governance Innovation
Abstract
We analyze the ‘plurilateralization’of global financial governance, defined as the proliferation of bilateral, regional and global
governance arrangements, exploring how these have shaped international monetary and financial relations. We argue that the
added layers of governance are the outgrowth of four factors: the demand for an international lender of last resort, the need
to manage cross-border financial and monetary policy spillovers, the desire for policy ownership and flexibility in an increas-
ingly globalized world, and the confluence of bilateral liquidity provision policies with countries’strategic foreign economic
policy goals. Despite the desire to rationalize and streamline an increasingly complex international financial architecture, we
argue that plurilateral governance is here to stay. We therefore offer some guidelines for living with this complexity.
Policy Implications
•Efforts to strengthen global arrangements and institutions are unlikely to reverse the trend toward plurilateralization and
regionalization of financial governance. Policy makers in international financial institutions and in central banks should
work toward coordination between global and plurilateral institutions and arrangements to strengthen division of labour
in global crisis management and macroeconomic coordination.
•Because regional and plurilateral financial arrangements do not address all problems and risks arising from global financial
integration, policy makers should strengthen the capacity of global-plurilateral institutional coordination to avoid forum
shopping by national policy makers and work towards addressing symmetric (as opposed to asymmetric) macroeconomic
shocks.
•Regional and plurilateral arrangements have strategic and political motivations that are not easily overcome by attempts
to forge optimal global financial governance arrangements –especially as the optimality of global rules and institutions is
itself still up for debate. The IMF should consider convening regular meetings with regional institutions and central bank-
ers to ensure policy coordination and to avoid further deglobalization of financial governance.
Introduction
Discussions of the global financial architecture tend to be
framed as a question of which arrangements are best, or
more modestly what agreements are feasible, for the world
as a whole. Forty-four nations representing all parts of the
world attended the Bretton Woods conference in 1944,
where agreement was reached on establishing the Interna-
tional Monetary Fund (IMF).
1
More than 70 years later, mem-
bership in the IMF is all but universal; 189 countries are
bound by the obligations of the Fund’s Articles of Agree-
ment.
2
Designed as a global institution to oversee a global
monetary and financial order, the IMF today more than ever
aspires to that role.
But this image of global governance rests uneasily with
the proliferation of bilateral and regional monetary and
financial arrangements. A bilateral arrangement is, of course,
an agreement between two governments or their respective
agencies (central banks or ministries of finance, for exam-
ple). These arrangements have a long history. One
Global Policy (2018) 9:Suppl.1 doi: 10.1111/1758-5899.12561 ©2018 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 9 . Supplement 1 . June 2018 7
Special Issue Article
To continue reading
Request your trial