NIFA-II or ‘Bretton Woods-II’?: The G-20 (Leaders) summit process on managing global financial markets and the world economy – quo vadis?

Journal of Banking Regulation, Oct 2010

Since November 2008, there have been four historic G-20 Leaders meetings (with a fifth scheduled for Korea in November 2010), in lieu of the traditional G-8 Heads of State meeting format, to address the current Global Financial Crisis and other related economic matters of global concern. This new global governance rubric has been denominated by the G-20 Leaders (representing 80 per cent of the world's population and 90 per cent of world GDP) as the ‘premier’ forum as to future international economic cooperation. This new governance model is rooted in a short and medium-term ‘Action Plan’ and within a broader and longer-term ‘Global Framework for Strong, Sustainable and Balanced Growth’ (a new global growth model under the G-20 Leaders’ direction).This article considers retrospectively the roots of this new economic governance paradigm and prospectively whether and in what ways this framework/process might signal a new international collaborative approach to global economic governance for securing ‘financial stability’ as a ‘global public good’ (that is, a ‘new international financial architecture’) and otherwise for better rationalizing the policy management of the global economy and the underlying globalization processes. Will this G-20 (Leaders) process prove to be able to function constructively and on a consensus basis as the G-7/8 tried to do previously; and, will it provide the global platform and umbrella framework within which a ‘new Global Deal’, and ‘Grand Bargain’ – a new ‘Bretton Woods II’ economic, monetary and financial World Order – might evolve so as meaningfully to direct and coordinate global monetary, financial, development, investment, trade and other related global policy considerations (for example, labour, energy, and environmental issues)? Or will this process prove to be merely an ad hoc enhancement of existing global instruments, institutions and arrangements that were put into place in the mid-to-late 1990s by the G-7/8 in addressing the various financial crises of the 1990s – the so-called ‘New International Financial Architecture’ (NIFA-I)? Also, in this article, the makeup and nature of the range of informal global financial ‘network’ arrangements, institutions and instruments generated in advance, otherwise related to NIFA-I, or being generated under the new governance framework will be considered, along with the newly envisioned roles of the IMF, Financial Stability Board, World Bank and OECD. Also, a brief discussion will be undertaken as to whether the G-7/8 forum will continue, and if so, in what context and in what relationship to the new G-20 Leaders framework.

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NIFA-II or ‘Bretton Woods-II’?: The G-20 (Leaders) summit process on managing global financial markets and the world economy – quo vadis?

r 2010 Macmillan Publishers Ltd. 1745-6452 Journal of Banking Regulation Vol. 11 NIFA-II or 'Bretton Woods-II'?: The G-20 (Leaders) summit process on managing global financial markets and the world economy - quo vadis? Joseph J. Norton 0 0 obtained his SJD, DPhil. and LLD and is the James L. Walsh Distinguished Faculty Fellow and Professor of Financial Institutions Law, SMU Dedman School of Law, and was formerly Sir John Lubbock Professor of Banking Law, University of London from 1993 to 2004 Since November 2008, there have been four historic G-20 Leaders meetings (with a fifth scheduled for Korea in November 2010), in lieu of the traditional G-8 Heads of State meeting format, to address the current Global Financial Crisis and other related economic matters of global concern. This new global governance rubric has been denominated by the G-20 Leaders (representing 80 per cent of the world's population and 90 per cent of world GDP) as the 'premier' forum as to future international economic cooperation. This new governance model is rooted in a short and medium-term 'Action Plan' and within a broader and longer-term 'Global Framework for Strong, Sustainable and Balanced Growth' (a new global growth model under the G-20 Leaders' direction).This article considers retrospectively the roots of this new economic governance paradigm and prospectively whether and in what ways this framework/process might signal a new international collaborative approach to global economic governance for securing 'financial stability' as a 'global public good' (that is, a 'new international financial architecture') and otherwise for better rationalizing the policy management of the global economy and the underlying globalization processes. Will this G-20 (Leaders) process prove to be able to function constructively and on a consensus basis as the G-7/8 tried to do previously; and, will it provide the global platform and umbrella framework within which a 'new Global Deal', and 'Grand Bargain' - a new 'Bretton Woods II' economic, monetary and financial World Order - might evolve so as meaningfully to direct and coordinate global monetary, financial, development, investment, trade and other related global policy considerations (for example, labour, energy, and environmental issues)? Or will this process prove to be merely an ad hoc enhancement of existing global instruments, institutions and arrangements that were put into place in the mid-to-late 1990s by the G-7/8 in addressing the various financial crises of the 1990s - the so-called 'New International Financial Architecture' (NIFA-I)? Also, in this article, the makeup and nature of the range of informal global financial 'network' arrangements, institutions and instruments generated in advance, otherwise related to NIFA-I, or being generated under the new governance framework will be considered, along with the newly envisioned roles of the IMF, Financial Stability Board, World Bank and OECD. Also, a brief discussion will be undertaken as to whether the G-7/8 forum will continue, and if so, in what context and in what relationship to the new G-20 Leaders framework. Journal of Banking Regulation (2010) 11, 261-301. doi:10.1057/jbr.2010.17 G-20-leaders; global governance; Bretton Woods-II; 'soft law' regulatory networks; global financial crisis; international standard setting - INTRODUCTION The recently initiated Group of Twenty (G-20) ‘Leaders’ Summit process will provide the 2008,4 apparently at the suggestion of the UK and French Heads of State,5 issued an invitation for, and on 14-15 November 2008 hosted, a Summit respecting ‘Financial Markets and the World Economy’ in Washington, DC.6 In lieu of utilizing the traditional Group of 7/8 (G-7/8)7 Heads of State vehicle (or a French suggested ‘G-8 plus 5’8) for addressing areas of major global economic concern, President Bush’s Summit invitation was made within the context of a new, ad hoc G-20 (Leaders) forum. This would be the first time the G-20,9,10 originally established for Finance Ministers and Central Bank Governors in 1999, would meet in a Heads of State (Leaders) format. However, as discussed in the latter parts of this article, the Washington, DC Summit would be the first of a progressive, ongoing series of G-20 Leaders Summits: London in April 2009, Pittsburgh in September 2009, and Toronto in June 2010, with others planned for Seoul in November 2010, France in November 211 and Mexico in 2012. In the context of global economic policy governance under the new G-20 (Leaders) rubric, this article will consider retrospectively the roots of this new global economic governance framework and prospectively whether and in what ways this framework/process might signal a new international collaborative approach to ‘global governance’ for securing ‘financial stability’ as a ‘global public good’ (that is, a ‘new international financial architecture’) and otherwise for better rationalizing the policy management of the global eco (...truncated)


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Joseph J Norton. NIFA-II or ‘Bretton Woods-II’?: The G-20 (Leaders) summit process on managing global financial markets and the world economy – quo vadis?, Journal of Banking Regulation, 2010, pp. 261-301, Volume 11, Issue 4, DOI: 10.1057/jbr.2010.17