Structural Causes and Consequences of the 2008–2009 Financial Crisis
Structural Causes and Consequences of the 2008–2009 Financial Crisis
This chapter takes a broader view of global financial architecture. It first discusses the 1944 creation of the Bretton Woods system of international institutions, explicitly designed to extend the success of the American New Deal to the rest of the world ravaged by the Great Depression and Second World War. The world economy was reasonably well-served by the Bretton Woods system for about three decades. It made the American dollar a de facto world reserve currency, which, however, invited political abuse, notably during the Vietnam War. This led to the abandonment of the Bretton Woods system, to a substantial reduction in exchange-rate discipline, and to increased financialization of the global economy. The chapter then discusses the current crisis era, calling for a substantially rebuilt system of world financial regulation that was equitably concerned with the welfare s of the world's population.
Keywords: global financial architecture, Bretton Woods system, New Deal, Great Depression, Second World War, world economy, exchange-rate discipline, financialization
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