The Road to International Financial Stability: Are Key Financial Standards the Answer?
... Like any one-dimensional measure, its scores can overlook the complexity of regulatory efforts (e.g. Schneider 2003Schneider , 2005, but they allow for useful macro-comparisons across countries and across standards. Figure 1 reports the average levels of compliance with various standards for OECD countries, emerging market nations, and the entire sample. ...
... First, the four standards with the lowest average implementation -corporate governance, accounting, auditing and insolvency -also are those for which the World Bank is charged with overseeing, via the IMF/World Bank Reports on Standards and Codes (ROSCs). The IMF is responsible, using the voluntary ROSC assessments, for surveying the other standards; most ROSCs to date concern those eight codes (Schneider 2003(Schneider 2005. Perhaps, then, indirect market pressures -in which private actors respond to public reports on implementation -operate more strongly for IMF-than for World Second, the compliance data remind us that, when there are disagreements over the content of global standards, their effectiveness will suffer, regardless of the role of private actors. ...
... Through their passive and active resistance, both market and government actors have also undermined some of the strategy's effectiveness in constituting a different kind of economic subjects. Such 24 Negotiations for standby agreements with Ecuador, Ghana and Brazil have included references to ROSCs (Schneider 2003). obstacles do not throw into doubt the constructivist character of the IMF's strategy; they do however raise interesting questions about its effectiveness. ...
... In another important programme, the so called Financial Sector Assessment Program, the IMF looks at and reports on the soundness and stability of the financial sector in each country (cf. Schneider 2003). ...
Financial markets are usually seen as forerunners in globalization, since the immaterial and weightless nature of finance seems to make geography less relevant than in most other industries. This picture of finance as the most global of businesses, however, is only partly true. For some parts of the financial markets, geography has lost its importance already a long time ago, but there are others where international and regional integration is still incomplete and on-going. Globally, the most important of the on-going processes is the financial opening up of the big emerging market economies, which poses huge challenges for international policy coordination and the development of institutions; at the European level, retail banking markets and payments systems are still very fragmented and a lot of work is needed to achieve the goal of a single market at least in the euro area. Finally, at the subnational level, the impact of financial integration is mostly felt through the changes in the variety of services and customer relationships available to SME’s and households. At each of these levels, financial integration holds great promise in terms of growth, efficiency and economic opportunities, but also requires significant adjustments in public policy and private
business performance.
... In practice, there is some evidence that publication of certain ROSCs has been made a condition of standby agreements with the IMF. ( Bretton Woods Update, 2003;Schneider, 2003) 11 These standards do not therefore fit within the framework of what Stephen Gill has described as the constitutionalization of neoliberalism, which involves the imposition of global juridical measures such as free trade and investment agreements that constrain domestic political power, although they do clearly have important connections with both this process and with the 'disciplinary neoliberalism' that Gill has discussed. (Gill, 1995(Gill, , 2002 There are perhaps closer parallels with Barry Hindess's (2004a) discussion of the emerging global norms on anti-corruption efforts. ...
Many political theorists have turned to the dramatic political events of the post-9/11 world – terrorism, war, and the erosion of civil liberties – for insight into our changing sense of the political. Yet few have examined the economic dimensions of these events or sought to learn what they might tell us about the changing nature of political community today. This article seeks to fill this gap by drawing on the work of Michel Foucault and Georgio Agamben to examine the intimate and changing relationship between the political and the economic in the contemporary world. Now more than ever, there is a particular conception of politics at stake in global efforts to govern economic relations. Global economic institutions like the IMF and World Bank are policing the definition of political community and, in doing so, extending the scope of liberal governmentality. At the same time, the character of their implementation and justification is that of the sovereign exception, as state autonomy must continually be breached through extensive conditionality in order for it to be re-established in the form of a more ‘sound’ political and economic order. This is a sovereign exception with a difference: for the norm that is being established is one that necessarily limits the scope of sovereign power in the interests of market freedom. Paradoxically, while the economy is often the exception to politics as usual, is it an exception that simultaneously enables and constrains the possibility of exercising sovereignty itself?
... A reader seeking serious challenges to these books must look outside the economics discipline to understand the source of the animosity toward these institutions in certain quarters. For example, a reader seeking commentary on reform of the global financial architecture from an explicitly ''developing country perspective'' should consult research projects of the G-24 or the UK Department for International Development (see, for example, Buira 2003;Schneider 2003). Similarly, other books on these same debates offer useful insights based on personal experience (Stiglitz 2002), stronger interdisciplinary underpinnings (Armijo 2002), closer analyses of emerging market risk (Pettis 2001), and doubts regarding the utility of any reform of the international financial architecture for the developing world (Soederberg 2001). ...
Few would dispute that the past two or three decades have been, in many ways, the heyday of neo-liberalism and market capitalism. Looking back, it is pertinent to ask whether the rise of neo-liberalism over the past three decades made the global economy progressively more free of coercive power and governmental ‘interventions’. Has the economic order of the global economy become increasingly ‘spontaneous’?1 Has power, in terms of global economic governance, become more and more diffused and dispersed in this period? I shall strive to demonstrate in this chapter that the opposite is the case. Never have market economies seen intervention in so manifold ways — and in so standardizing and totalizing ways. Never before have predominant modes of global economic governance taken our notion of what a market economy is so far away from a neo-liberal ideal of ‘spontaneous order’.
Recent corporate scandals in the USA and elsewhere have led to a wide-ranging re-examination of standards for corporate governance with repercussions that extend also to financial regulation. The key standards for financial systems whose application is a major component of current initiatives to strengthen the so-called international financial architecture include three that are pertinent to this re-examination, and will themselves be affected by the policy response: the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance, and the initiatives concerning International Financial Reporting Standards (IFRS) (see Box 2.1) and International Standards on Auditing (see Box 2.2).
The role of the International Monetary Fund (IMF) and the World Bank (WB) in providing financial stability to countries with financial problems has received conflicting views from different social and political groups. The purpose of this paper is to examine whether these two international organizations provide financial stability by focusing on the case of the Russian and East Asian financial crises. After a comprehensive analysis (graphs, tables and statistical regression models), the researchers found that the support of both the IMF and the WB was mostly without success in these two crises; thus promoting financial instability. This finding comes from both a descriptive analysis of financial stability in terms of unemployment, inflation and changes in GDP and GDP per capita and quantitative calculations by performing multiple linear regressions in PASW 18.0 with certain indicators [GDP Annual growth rate, Interest rate spread (lending rate minus deposit rate, %), Inflation, GDP deflator (annual %), Annual industrial value and GINI Index]. The intervention of these international organizations appears to have been followed by unemployment and inflation rises, as a result of their financial policies. These results provide important incentives for international policy changes in dealing with financial crises, emphasizing the importance for less destabilizing practices.
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Recent financial reforms in Japan and elsewhere in Asia represent, for various authors, a fundamental shift in financial governance and in state-business relations in the region. The old 'developmental' state in East Asia has supposedly made way for a neoliberal 'regulatory' state, with its emphases on agency independence and the non-discretionary enforcement of rules. I show in this paper that this interpretation exaggerates the extent of the transformation in the important case of Japan. Although the outward institutional forms of economic governance in Japan, as with many Asian developing countries, has changed dramatically since the mid-1990s, discretion still remains at the core of economic and financial policy. In the area of Japanese banking regulation and supervision, I show how this highly discretionary application and enforcement has been consistent with domestic political pressures. The result is a substantial divergence between superficial convergence upon international regulatory standards and underlying behaviour. I also give reasons why globalization does not mean that this hybrid regulatory model is unsustainable.
Recent corporate scandals have led to a wide-ranging re-examination of standards for corporate governance with repercussions that extend to financial regulation and the key standards for financial systems which are a major component of current initiatives to strengthen the international financial architecture and include corporate governance as one of their subjects. This paper contains an account of the breakdown of corporate governance in the most baroque of recent scandals, that involving the collapse of Enron, where there were not only conflicts with standards for good corporate governance but also unusually extensive use of sophisticated techniques and transactions to manipulate the firm�s financial reports. Good corporate governance presupposes satisfactory performance not only on the part of auditors but also of other "watchdogs" or "gatekeepers" from the private sector such as credit rating agencies, lenders, investors and financial analysts. Their role in turn must be complemented by effective regulation, which in the case of a firm with operations as complex as Enron involves several different bodies. The paper documents the extensive failures of these different parties in the Enron case. This discussion serves as a backdrop to a discussion of policy initiatives in the aftermath of Enron�s collapse and other corporate scandals at the international level - most importantly the strengthening of the OECD Principles of Corporate Governance - and in the United States - where the response has included the far-reaching Sarbanes-Oxley Act whose repercussions will also be felt outside the United States owing to global importance of the country�s financial markets. The discussion also points to links between policy responses involving corporate governance proper and initiatives regarding international financial regulation. The paper also includes reflections on alternative models of corporate governance and of some of the implications of the w
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