Manuela Moschella

Lagged Learning and the Response to Equilibrium Shock. The Global Financial Crisis and IMF Surveillance

The paper investigates the changes to the Fund’s bilateral surveillance policy in the wake of the global financial crisis of 2007-09 asking about the factors that caused the quick and deep shift to a systemic surveillance approach. In answering this question, the paper argues that the causes of the quick and deep transformation of IMF surveillance lie in the preceding two decades of incremental accumulation of knowledge and small transformations in policy instruments and organizational practices. In identifying the causes of present policy choices in the lessons drawn from past experience, the paper provides an example of lagged learning because the lessons drawn from the 1990s emerging market crises exerted their full impact only as a response to the global financial crisis. These findings therefore contribute to the literature that aims at showing the importance of temporality and process sequencing to explain policy change.

Getting Hedge Funds Regulation into the EU Agenda: The Constraints of Agenda Dynamics

Abstract Why did the issue of hedge fund regulation enter the formal EU agenda in response to the subprime crisis? Building on existing literature on agenda dynamics in the EU, this paper argues that framing and issue expansion were key in getting the issue into the formal agenda, and that issue expansion does not necessarily imply public mobilization. Going beyond existing scholarship, however, the paper also shows that framing processes are closely associated with the characteristics of the issue for debate and that issue expansion is intimately related to the arrangements governing the specific issue domain. In other words, whereas framing and issue expansion are traditionally conceived as a strategic choice or as the outcome of an exogenous event, this paper shows that framing may also be shaped by the nature of the issue at stake and that issue expansion may result from the unintended consequences of previous governance choices.

Seeing Like the IMF on Capital Account Liberalisation

This article explores the ideational dynamics that shaped the International Monetary Funds (IMF) campaign to establish capital mobility as a formal obligation of IMF membership during the 1990s. First, the article examines how the IMF made the issue of capital account liberalisation ‘legible’ through constructing a particular ‘legibility map’ on capital mobility, which was rigorously promoted across its membership. Second, the article explores the processes through which the IMFs legibility map on capital mobility was accepted by the organisations member states. The article traces debates within the IMF Executive Board relating to the decision to amend the IMFs Articles of Agreement to give the organisation a formal mandate and jurisdiction over capital account liberalisation to complement its existing mandate and jurisdiction over current account transactions. By tracing the negotiations on this amendment proposal, the article illustrates how the IMF used the ambiguities inherent within its cognitive map on capital account liberalisation to persuade member countries of the need to amend its Articles of Agreement. In the wake of the Asian crisis, however, the persuasiveness of the IMFs policy preferences on capital mobility quickly declined in tandem with a broader deterioration in the organisations cognitive authority in the world economy.

Back to the drawing board: The international financial architecture exercise

During the last several months, we have witnessed one of the most trying times for financial markets in several decades. The financial crisis, which burst in the US sub-prime mortgage market and propagated to the global economy, has once again demonstrated the risks associated with the integration of the world’s capital markets. Indeed, like the financial crises that swept the emerging market countries in the 1990s, the crisis that sparked in one of the most sophisticated financial systems in the world has shown the vulnerability of national economies to shocks originating outside their domestic financial systems. As several advanced countries have entered into recession, it has become frequent to hear talks of de-globalization. That is to say, the 1990s consensus on the benefits of global financial integration and on the role of markets in ensuring systemic stability seemed to have been called into question. At the World Economic Forum in Davos this year, for instance, policy makers and private sector actors puzzled with the question of whether the old consensus still holds or whether a new consensus is somehow emerging (Rachman, 2009). One important measure to gauge whether a new policy consensus is emerging is the scope of the measures proposed to reform the international financial architecture (IFA). Indeed, since the crisis burst, there has been pressure from world leaders to intensify work on a complete overhaul of the institutional architecture of the global financial system – a sort of

Searching for a Fix for International Financial Markets: The European Union and Domestic Politico-Economic Changes

The paper investigates the sources of the EU position in the G20 meetings convened in response to the global financial crisis of 2007–2009. In particular, the paper investigates the factors that led the EU to campaign for strengthening the role of public authority and for giving priority to financial stability and social protection in international financial regulation. The argument of the paper is that the sources of the EU position lie in the convergence of views of the largest EU member states around a specific approach to financial capitalism. Indeed, the crisis has shifted the EU away from the ‘neoliberal’ towards the ‘regulated’ model, as attested by the content of EU financial sector policies.

International financial governance in hard times: tracing the transformations

This article reviews the tenets of the intellectual consensus on how to organize the international financial system that came to crystallize at the end of the 1990s and the contestation of such a consensus in the aftermath of the global financial crisis of 2007–09. Illustrating the path of ideational transformation from the early 1990s until the present time, the article builds on recent constructivist works in international political economy that take economic ideas held by agents as the principal unit of analysis. In doing so, it brings to the surface both the substantive changes that had taken place in the principles underlying the governance of the international financial system and the dynamics of ideational change. Specifically, the article suggests a shift away from a governance project based on the dispersion of supervisory authority and finds that new policy ideas of regulation and political centralization have all been conceived with negative reference to the past.